essay on opening a restaurant business

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Nature Of Business Of Restaurant (Essay Sample)

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Restaurants are one of the most important parts of the hospitality industry. Nothing beats a dining experience with family in a great restaurant environment while delicious food is being served. No matter how lucrative and profitable the restaurant business looks for a far one should never jump in blindly. Most people who open a restaurant without keen observation, careful analysis, and a proper business plan end up failing in the first year of opening a restaurant. This is the reason why 25% of all restaurants that open fail in the first year and shut down. It is very important to understand the nature of the restaurant business beforehand which is why I am writing this essay.

Table of Contents

Example Of Nature Of Business: Restaurant – 700 Word Long Essay

The restaurant business is one of the most appealing businesses in the hospitality industry. While enjoying the delicious food at a fine restaurant we all have thought about how prosperous the restaurant business really is. As lucrative as it looks by afar, the restaurant industry is not easy to flourish in. Many people who enter the food industry without a proper restaurant business plan and business strategies end up losing it all in the first year. In this essay, I will provide information about the nature of the restaurant business and what makes it successful or unsuccessful.

People often misjudge the potential of the restaurant business. It can either make you financially established or it can bring you to the point of financial ruin. Whatever happens to you depends on the decisions you make. Before opening a restaurant the owner must carefully analyze the location of the restaurant, the targeted customers, business plans, business model, business idea, financial projections, and marketing plan. Many people fail in this service business because they do all these things after opening their restaurant . A business owner who does not focus on these things becomes burdened with rents, bills, and employee salaries until they eventually shut down.

To be successful in the foodservice industry it’s important to hire a management team and ask them to make a business proposal. The business proposal must include all the details and give you an idea of whether to pursue a food business or not. The proposal must include details regarding the potential income statement, business hours, market trends for new business, interested parties, target customers, and estimated gross margin. It should also list what investments should be made for kitchen equipment, good wait staff employees, best chefs, and advertisement costs. To be a successful restaurant business owner you must be careful while accepting or rejecting the business plan.

Once a decision is made to open a restaurant, the right niche must be explored to gain a competitive advantage. There are many different types of restaurants that include coffee houses, fast foods restaurants, fine & casual dining, cafes, and buffet-style restaurants. While establishing local businesses it’s important to ask for the word of mouth from locals about what they like in a restaurant. To establish a good cash flow statement and rapid growth the restaurant business plan must focus on providing a good environment with high-quality food.

Most business owners fail in this business because they do everything correctly but fail to realize the importance of food. When it comes to food business success the taste, quality, presentation, and preparation time of the food is by far the most important factor in business success or failure. Restaurant owners should always focus the most on delivering the best quality food they can. For a restaurant to flourish in a local market it should have a high number of returning customers. Potential customers will only return to a restaurant that serves great food. It should be noted that a customer can compromise on anything but they won’t compromise on food quality. A good restaurant menu consists of everything including appetizers, main courses, beverages, and desserts to name a few.

It doesn’t matter if you own a small business or a big restaurant, you should always focus on advertisements and a good marketing plan to attract more people. To be successful in the food industry it is important to market your business. To capture a market share the owner should use email marketing, internet listings, digital and local ads, print media along with all other mediums to spread the word. Good marketing will surely help you generate good cash flows.

In conclusion , for any business to progress and flourish it’s important that the business owners must work hard and smart. The nature of a restaurant business is not easy to understand and master. If anyone wants to open a restaurant then he/she must work in a restaurant to know how everything works. Anyone who jumps blindly into the food industry will most probably fail to generate any good income.

Why Restaurant Is A Good Business – 300 Word Short Custom Essay

The hospitality industry is a growing business sector in our society. People usually have great fun and enjoyment with their loved ones while dining together. Delicious foods and a good environment add to the beauty of memorable days. You must agree that while dining at a fine restaurant we all have thought about the profit aspect of the food business. No matter how lucrative it looks from afar, making a restaurant successful is no easy task. These are the reasons why more than 25% of restaurants shut down within the first years. These are the reasons why it’s very important to explore the nature of this business before making a decision. In this essay, I will discuss why a restaurant is a good business by explaining the advantages of owning a restaurant.

Opening a restaurant is a very good business option for many reasons. First of all, if you are a food enthusiast then there is nothing better than doing what you love. A restaurant business needs a lot of time, effort, skill, and sacrifice to become well established. Being a food enthusiast you will be able to know about customer needs and wants even without asking. Once your restaurant starts running you will be able to generate huge profits; that too, while enjoying food at your own restaurant.

Secondly, opening a small restaurant does not require a huge amount of investment. You just need a skilled team and small investment to start serving some great food to all your clients. However, to be successful you must have a restaurant business plan along with skilled human resources to excel at what you do. Another reason that makes a restaurant a good business is you can enjoy freedom by being your own boss. You also get the benefit of choosing your team and building a foodie community. You also get to eat different types of food for free and also become a better person by working in a fast-paced environment. So these are the reasons why opening a restaurant is a great business idea in my humble opinion.

Do you like these sample essays about the nature of a restaurant business? Reach out to Essay Basics to get a professionally written plagiarism-free and unique custom essay on any topic in less than 3 hours.

FAQ About Nature of Business Restaurant Essay

What type of business is a restaurant.

A restaurant business is a part of the hospitality industry. Its a services business that requires skilled labor to prepare food from different products.

What Are The 5 Different Types Of Restaurant?

The 5 different types of restaurants include fine dining restaurants, fast food restaurants, cafes, buffet-style restaurants, and dessert restaurants.

Which form of business is suitable for restaurants?

Restaurants are very fast-paced businesses. They fall in the hospitality industry and the business category for a restaurant is the “food and drink” category.

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1030.5831&rep=rep1&type=pdf

Business Proposal: Opening a New Restaurant Proposal

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Introduction

Proposed plan.

Opening a new restaurant requires conceptualizing the idea robustly by researching how the industry operates. In this case, the restaurant industry is quite competitive and requires proper planning to get the right framework within which the new business will operate. If the startup is not well managed, it will be doomed to failure, and the business plan becomes essential at this stage.

General Background

Starting a new business is usually an arduous task in most cases, particularly when there is no proper planning or management. A restaurant business is quite competitive because it involves handling constant customer issues that can make or break the new business. Therefore, a restaurant business plan framework is relevant to act as a guiding principle in the new initiative (Kryukova et al., 2019). Some of the crucial parameters in the new restaurant business regarding operations and management include employee training, financials, location, and menu design. The business plan will enable the new business to turn its ideas into reality.

Statement of Problem

In contemporary society, the restaurant industry or the hospitality sector is quite competitive and requires a robust approach to succeed in the field. In many cases, there are mismanagement of the business and a lack of a business plan approach that would enable the new business to move forward (Madeira et al., 2021). Planning for the new restaurant business matters a lot because it will help chart the way forward for the new business, eventually leading to success.

This business plan seeks to identify and analyze business opportunities for the new restaurant business. In this case, there is a need to focus on or evaluate the new restaurant business’s financial, economic, and technical feasibility (Madeira et al., 2021). In addition, there is a need to assess the primary considerations in investing in the new business.

Sources of Data

Some data sources should entail tertiary, secondary, and primary forms of data. In this case, the specific data sources should include focus groups, questionnaires, and personal interviews. The new restaurant business plan should always incorporate parameters such as area of operation, niche market to be filled or targeted, the goals and objectives of the new business, and the types of foods or cuisine that the new restaurant will focus on (Kryukova et al., 2019). Having a company or restaurant overview will be crucial because it will highlight some particulars of the new business, the kind of restaurant, and how to accomplish the initiative.

In the present society, having a startup is quite challenging, and a winning business plan is a necessity that helps to ensure the success of the new business (Madeira et al., 2021). If the new business has a plan and is well managed, then the enterprise will be successful. Some of the elements to consider in the new business include excellent customer service and financial strength.

Material and Cost

In the new restaurant business, it is relevant to ensure enough finances to boost the plan. Some of the materials and costs of the new business include supporting documents, experience in running a restaurant business, a budget, operating costs, startup costs, projections, marketing plan, marketing research, and new concepts (Kryukova et al., 2019). For example, calculating financial projections for the new business will be essential.

The new restaurant business plan is essential because it could help the business access some finances from lenders in the market. In addition, the plan will enable the new business to comprehend what and how the market is and the expectations (Madeira et al., 2021). In this case, a new business plan would let the new business know what to expect.

The new business will need personnel to run the venture, such as waiters, cooks, cashiers, sales executives, and junior and senior managers and supervisors. Hiring staff for the business is essential because it will help run the enterprise. No business can operate without the necessary because they are the ones to decide whether the new business will succeed or not. The personnel will include bartenders, hosts, servers, cooks, and managers (Kryukova et al., 2019). Each personnel has a particular function and ensures that operating the restaurant is successful. When the restaurant is still new, some duties may overlap from one section to another. For example, the restaurant host could be as well as the person who manages the restaurant. In addition, a family business may have some personnel who double up with other roles, such as cashiers and supervisors.

Plan Phases

Some of the plan phases of a new restaurant business will entail expansion and sustainability, pre-opening, restaurant building, product development, concept development, and business feasibility (Madeira et al., 2021). The new business plan will be like a well-organized recipe that ensures the preparation of the best food in the restaurant industry. A new restaurant’s successful launch will entail sustainability for the future and ensure some efficient energy and meticulous planning. In addition, a viable planning strategy will be the one that sustains itself and will turn out to be an expandable and profitable business enterprise. In product development, there is a need for the new business to come up with a menu that will suit the customer’s needs. Some things that should guide the menu include competitor offerings, market research, and service style, among others. The restaurant building phase is one of the most crucial in a sustainable business.

Expected Problems

Like any other business, starting a new restaurant business has various problems. Some of the problems include hiring permanent and temporary staff, menu pricing and inventory management, provision of healthcare cover, enough capital, and meeting market trends, among others. For example, the owner of the new business has to keep up with the new market trends in distribution. In this case, market familiarity is of utmost consideration because it will determine the new venture’s success (Kryukova et al., 2019). Periodic research will be essential because it will help have projections of the future. In addition, having adequate capital will be essential and, if not well managed, could be the primary issue that may make the new business collapse. Hiring staff for the new business is also a challenge because of the cost implications. Both temporary and permanent staff have various needs that the new business offers and could pose a threat to the venture.

Expected Results

It is the goal of every person to expect the best for starting a new restaurant business. Although many business startups fail within the first year of their formation, the new business expects to make considerable sales and profitability (Kryukova et al., 2019). Turning the existing clientele will facilitate enhanced sales and profitability. Promoting the business on social media platforms will be the most relevant way of advertising the business in the 21st century.

Summary of Key Points

Starting a new restaurant business is quite competitive because of the extreme rivalry within the hospitality industry. In this case, the new business will face stiff competition from other similar players in the industry (Kryukova et al., 2019). However, the new restaurant business is expected to have some problems or pitfalls, just like any other business venture. For example, some of the problems will relate to hiring new staff and having enough capital to run the business.

Reemphasis of Need

There is a need for a viable business plan that is relevant to beat the competition and ensure the new business venture is successful. It is necessary to ensure the business is competitive from the onset (Madeira et al., 2021). A business plan will assist in conceptualizing the idea and finding more regarding the industry. Proper planning is the only surest way to ensure the new business is successful.

Request for Action

Hiring the best staff and product development will ensure the success of the new restaurant business. The restaurant will need the best staff because they will offer professionalism to the business leading to success. For example, the restaurant will need a manager, chef, cooks, and waiters, among other staff, who are well trained (Kryukova et al., 2019). In addition, the new business needs an enhanced product development to ensure that it has a wide variety of products and services on offer. The menu needs to fit the customer’s aspirations regarding what is on offer. Robust financial analysis is also necessary for the new business and hiring professional assistance would be ideal. The restaurant should hire a trained accountant to handle this docket to assist in having financial estimates.

Kryukova, E., Bodneva, N., Sribnaya, T., Filimonova, N., & Vershinina, O. (2019). The Development of the Restaurant Business in Russia. Journal of Environmental Management and Tourism, 10 (3), pp. 412-419.

Madeira, A., Palrao, T., & Mendes, A. (2021). The Impact of Pandemic Crisis on the Restaurant Business. Sustainability, 13 (1).

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IvyPanda. (2023, May 12). Business Proposal: Opening a New Restaurant. https://ivypanda.com/essays/business-proposal-opening-a-new-restaurant/

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Bibliography

IvyPanda . "Business Proposal: Opening a New Restaurant." May 12, 2023. https://ivypanda.com/essays/business-proposal-opening-a-new-restaurant/.

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Want to Open a Restaurant? Here's a Step-By-Step Guide This guide provides all the information you need to open and operate a successful restaurant.

By Laura Tiffany Edited by Melissa Malamut

Key Takeaways

• Profit margins are thin for restaurants; make a detailed business plan that accounts for every dollar.
• Investing in experienced servers and cooks will pay off in the long term.
• Pick a service style and food concept and let those decisions dictate your decor, menu and ambiance.

Opinions expressed by Entrepreneur contributors are their own.

Starting and opening a new restaurant is an exciting venture that can be both a rewarding and challenging experience. It takes work, however. Opening a successful restaurant requires a strong business plan, an understanding of the local market, an eye for the right location and staff, permits and business licenses, inventory and supplies management, appealing menus and more.

If it's your first time, you'll need to look beyond the grand opening and strategize for generating a cash flow that allows you to do more than just break even. Still, with the right guidance, you can make your dreams of owning a successful restaurant come true. This guide will give you all the information you need to start and open a restaurant. It will cover everything from creating a new business plan to setting up operations and marketing your restaurant. By following this guide step by step, you can open a restaurant that will attract customers for years to come.

What's Inside

Target markets

Restaurant service styles, selecting a food concept, steps to opening your own restaurant, working in a restaurant.

• Safety regulations

Restaurant startup resources

Breaking into a new market is a challenge, and no single food-service operation has universal appeal. Many newer entrepreneurs have trouble accepting this fact, but it's impossible to capture 100% of the market. When you try to please everyone, you end up pleasing no one. So focus on the five or 10% of the target market that you can get — and forget about the rest.

With that said, who's eating at restaurants? Let's look at the main market categories of food-service business customers:

• Generation Z The youngest consumers represent about 20% of Americans and make up the first digitally native generation. Born between 1997 and 2012, Gen Zers grew up with smart phones, and many are socially minded – embracing the crossover of commerce and mental health, for example. And if you want their attention, act fast: young consumers are quicker to tune out ads than older generations.
• Millennials This generation was born between 1980 and 2000. Millennials account for more than three times as many people as Generation X, and they're a prime target for a food-service business. This generation often opts for fast-food and quick-service items, with about 25 percent of their restaurant visits going to burger franchises , followed by pizza restaurants at 12 percent.
• Generation X Generation X is a label applied to those who were born between 1965 and 1980. This group is known for strong family values. While earlier generations strove to do better financially than their parents, many Gen Xers are focused on their children. They are concerned with value, and they favor quick-service restaurants and midscale operations that offer all-you-can-eat salad bars and buffets. To appeal to this market group, offer a comfortable atmosphere that focuses on value and ambience.
• Baby boomers Born between 1946 and 1964, baby boomers make up the second-largest segment of the U.S. population, after millennials. Prominent in this generation are affluent professionals who can afford to visit upscale restaurants and spend money freely. Many boomers are becoming grandparents, making them a target of restaurants that offer a family-friendly atmosphere and those that provide an upscale, formal dining experience.
• Empty nesters This group consists of older Gen X and seniors (people in their early 50s to about age 64). Empty nesters typically have grown children who no longer live at home, and their ranks will continue to increase as Gen X grows older and their children leave home. With the most discretionary income and the highest per-capita income of all the generations, this group typically visits upscale restaurants. They are less concerned with price and are more focused on excellent service and outstanding food. Appeal to this group with elegant surroundings and a sophisticated ambience.
• Seniors The senior market covers the large age group of people age 65 and older. Generally, the majority of seniors are on fixed incomes and may not often be able to afford upscale restaurants often, so they tend to visit family-style restaurants that offer good service and reasonable prices. "Younger" seniors are likely to be more active and have more disposable income than "older" seniors, but the group typically appreciates restaurants that offer early-bird specials and senior menus with lower prices and smaller portions, since their appetites are less hearty than those of younger people.

Restaurants are classified into three primary categories: quick-service, midscale and upscale. Quick-service restaurants are also known as fast-food restaurants. These establishments offer limited menus of items that are prepared quickly and sold for a relatively low price. In addition to very casual dining areas, they typically offer drive-thru windows and take-out service.

When people think of fast-food restaurants, they often think of hamburgers and french fries, but establishments in this category also serve chicken, hot dogs, sandwiches, wraps, salads, pizza, fresh seafood, grain bowls and foods from other regions.

Midscale restaurants, as the name implies, occupy the middle ground between quick-service and upscale restaurants. They offer full meals but charge prices that customers perceive as providing good value with plenty of special offers . Midscale restaurants offer a range of limited and full-service options. In a full-service restaurant, patrons place and receive their orders at their tables; in a limited-service operation, patrons order their food at a counter and then receive their meals at their tables. Many limited-service restaurants offer salad bars and buffets.

Upscale restaurants offer full table service and do not necessarily promote their meals as offering great value; instead, they focus on the quality of their cuisine and the ambience of their facilities. These are the places that find themselves on a list of trip ideas for tourists looking for great food from a renowned chef. Fine-dining establishments are at the highest end of the upscale restaurant category and charge the highest prices.

Restaurant patrons want to be delighted with their dining experience, but they don't necessarily want to be surprised. If you're anticipating a family-style steakhouse (based on the name or the décor of the establishment) but find yourself in a more formal environment with a bewildering — and pricey — gourmet menu, the surprise may keep you from enjoying the restaurant. Concepts let patrons know in advance what to expect, and they provide some structure for how to operate restaurants. Here are some of the more popular restaurant concepts:

• Seafood Quick-service seafood restaurants generally offer a limited range of choices, often restricted to fried seafood. Midscale and upscale seafood restaurants offer a wider selection, prepared in ways other than fried, such as baked, broiled and grilled. Seafood can be a risky area on which to focus, as prices are always changing, and many kinds of seafood are seasonal. Also, quality can vary tremendously. When shopping for seafood, make sure the items are fresh and meet your standards of quality. If you are not happy with what a distributor offers, your customers won't be, either.
• Steakhouses Steakhouses are part of the midscale and upscale markets. Midscale steakhouses are typically family-oriented and offer a casual environment with meals perceived as good values. In terms of décor, comfort is emphasized and Western themes are popular. Upscale steakhouses offer a more formal atmosphere and may serve larger cuts of meat that are of better quality than those served in midscale restaurants. Upscale establishments also charge higher prices, and their décor may be similar to that of other fine-dining establishments, offering guests more privacy and focusing on adult patrons rather than families.
• Family-style restaurants As the name implies, these establishments are geared toward family fun, and the often-reasonable prices also appeal to seniors. They offer speedy service and their menus are designed to satisfy a broad range of customers, from children to seniors. Family-style restaurant prices may be higher than those at fast-food restaurants, but these establishments provide table service to compensate. The décor of family-style restaurants is generally comfortable, with muted tones, unremarkable artwork and plenty of booths and wide chairs. Booster seats and highchairs for children are readily available.
• Casual-dining restaurants These establishments appeal to a wide audience, providing a variety of food items — appetizers, salads, main dishes, desserts. Casual-dining restaurants offer comfortable atmospheres with midrange prices. Many center on a theme that's incorporated into their menus and décor. You may need to get your liquor license, depending on what you plan to serve.
• Global cuisine These restaurants enjoy a significant share of the U.S. restaurant market. They range from quick-service places with limited selections to upscale eateries with a wide variety of menu items. Their menus typically include Americanized versions of global dishes with unique flavors, as well as more authentic food. The three most popular kinds of these food styles are Italian, Chinese and Mexican. Other popular types include Indian, Thai, Caribbean, Cuban, French, German, Japanese, Korean, Greek, Turkish and Vietnamese.
• Pizzeria You have two primary choices when starting a pizzeria. One is a to-go restaurant in a modest facility with a pizza- and beer-forward menu, limited seating and a self-service atmosphere. The other is a full-service pizza restaurant with a menu that features not only a variety of pizzas, beer and wine, but also Italian entrees (spaghetti, ravioli, lasagna), side dishes (including salads) and a few desserts. The foundation of a pizzeria is the pizza, of course. If you don't know how to make a good pizza, hire someone who does. Invest in top-quality ingredients and preparation methods, and make every pizza as if you're going to eat it yourself.
• Sandwich shop/delicatessen One reason sandwich shops are so successful is because they enjoy high profit margins. Sandwich shops and delicatessens can also change their menus quickly and easily adapt to current tastes. In the wake of the pandemic, when many regular customers no longer worked from offices, delis have also incorporated delivery and catering into their business models. Most sandwich shops serve only sandwiches, possibly with some side dishes or desserts. A delicatessen usually offers a more extensive menu, including sandwiches, prepared meats, smoked fish, cheeses, salads, relishes and various hot entrees.
• Coffeehouse With Americans consuming more than 140 billion cups every year, coffee is the country's most-popular beverage (not counting water, of course). People frequent coffeehouses and espresso bars for a variety of reasons: to meet with friends, to do work, for a quick lunch, for an afternoon perk or simply to start each morning with a great cup of Joe. The most successful coffeehouses have heavy foot traffic and high-volume sales. Many will serve between 200 and 300 cups per day, despite having limited floor space and modest seating capacity. Profit margins for coffee and espresso drinks are extremely high — after all, you're dealing with a product that's more than 95 percent water. At the same time, the average cup of coffee costs around $3, so you need volume to reach and maintain profitability. Besides specialty roasted coffee by the cup, most coffeehouses also have espresso-based drinks (cappuccinos, lattes, etc.), assorted teas, bottled water and fruit juices, along with an inviting assortment of baked goods, a selection of desserts and coffee beans by the pound.
• Bakery With competition from supermarkets that have in-store bakeries, "bread-only" retail bakeries have almost disappeared from the United States. Bakeries today usually offer cakes, scones, bagels and coffee drinks, and sometimes even offer full dining menus, including sandwiches, hot entrees, beer and wine. Consumers love fresh bakery goods, but the market is extremely competitive. As you develop your particular bakery concept, you'll need to find a way to differentiate yourself from other bakeries in town.

Find the concept that best suits you

Before you can begin any serious business planning, you must first decide what specific segment of the food-service industry you want to enter. Your own personality and tastes will dictate whether you choose to open a commercial bakery, a coffee cart, a fine-dining restaurant or another type of operation. Then, once you've decided what business suits you, it's essential to figure out the niche you'll occupy in the marketplace.

Related: The Top Full-Service Restaurant Franchises in 2024

For example, are you an early riser, or do you prefer to stay up late and sleep late? If you like — or at least don't mind — getting up before dawn, your niche may be a bakery or a casual breakfast-and-lunch operation. Night owls are going to be drawn to the hours required for bar-and-grill type restaurants, fine-dining establishments and even pizzerias.

Do you like dealing with the public, or are you happier in the kitchen? If you're a people person, choose a food-service business that gives you plenty of opportunity to connect with your customers. If you're not especially gregarious, you'll probably lean more toward a commercial type of business, perhaps a bakery or even a catering service, where you can deal more with operational issues than with people.

Some other types of questions to ask yourself include: Do you have a passion for a particular type of cuisine? Do you enjoy a predictable routine, or do you prefer something different every day? Are you willing to deal with the additional responsibilities and liabilities that come with serving alcoholic beverages?

As you do this self-analysis, think about your ideal day. If you could be doing exactly what you wanted to do, what would it be? Once you've decided on the best niche for you as an individual, it's time to determine if you can develop a niche in the market for your food-service business.

There's no perfect recipe for opening a successful restaurant, but there are proven actions that will get your business off the ground and help you start feeding customers . Follow these steps when opening a restaurant:

1. Write a business plan

Armed with practical experience, you're ready to put together your business plan — the most critical element of your restaurant. Map out everything on paper before you buy the first spoon or crack the first egg.

When you're writing a business plan you should include:

• A clear definition of your concept
• A description of your market
• Your menu and pricing
• Detailed financial information, including data on your startup capital (amount and sources) and your long-term income and expense forecasts (including operating costs such as kitchen equipment and food costs)
• A marketing plan including target customers
• Employee hiring
• Training and retention programs
• Detailed plans that outline how you'll deal with the challenges restaurateurs face every day (including health department compliance, customer experience and expansion)
• An exit strategy

A well-crafted business plan is the cornerstone of any successful restaurant. It's best to have it professionally written, but if you're short on cash, you can also draft a document yourself. Just be sure that your plan is comprehensive and as accurate as possible. Include realistic projections, research data (such as current industry trends) and thorough analyses of the competition. Because restaurant margins are so thin, it's also smart to detail every single cost you might encounter — down to the price of napkins, ice, internet , glassware and cooking oil. No matter what you decide, your business plan should be a living document that you update and refine as your restaurant evolves.

2. Fund your business

How much money you need to start depends on the type of business, the facility, how much equipment you need, whether you buy new or used, your inventory, marketing and necessary operating capital (the amount of cash to carry you until your business starts generating profits). It's easy to spend hundreds of thousands of dollars starting a restaurant, but it's not essential. For instance, when Borealis Breads owner Jim Amaral started his first bakery in Maine, he rented a space that had been a commercial bakery and came complete with mixers, benches, ovens and other equipment. He was able to start with just $10,000 he'd borrowed from family and friends, and used that primarily for inventory.

Regardless of how much you need, you will definitely need some cash to start your food-service business. Here are some suggestions of where to go to raise your startup funds :

• Your own resources Do a thorough inventory of your assets. People generally have more assets than they realize, including savings accounts, retirement accounts, equity in real estate, recreation equipment, vehicles, collections and other investments. You may opt to sell assets for cash or use them as collateral for a loan.
• Family and friends The logical next step after gathering your own resources is to approach friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are with the person, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk of investing in your business.
• Partners Using the "strength in numbers" principle, look around for someone who may want to team up with you in your venture. You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations. And choose your partners carefully — especially when it comes to family members.
• Government programs Take advantage of the abundance of local, state and federal programs designed to support small businesses. Make the Small Business Administration (SBA) your first stop, but be sure to research other programs, too. Underrepresented groups and veterans should check out special financing programs designed to help them get into business. The business section of your local library is a good place to begin your research.
• Banks and other lending institutions Despite the general mood of tight credit, many banks are still willing to make small-business loans . They may even be more open now as they seek to increase their loan portfolios.
• Be prepared with a business plan and financial projections These help prove your concept and show lenders you are serious about your business. Also, compare rates from multiple lenders, and don't forget to factor in closing costs and other fees.
• Venture capitalists and angels If you have a capital-intensive concept with proven profitability potential, venture capitalists or angel investors may be willing to provide the funding you need for a stake in your business.

As you can see, there are many ways to get the capital you need to get your restaurant off the ground — you just need to be organized, prepared and willing to do your research.

3. Choose a location

Depending on where you start your food-service business and the particular type of business you choose, you can spend anywhere from $2,000 to $12,000 on monthly rent. That doesn't include outfitting a kitchen or renovating the space, which can cost tens of thousands of dollars.

Related : The Best States to Start a Business .

Not every food-service operation needs to be in a retail location, but many do. For those relying on retail traffic, here are some factors to consider when deciding on a restaurant location :

• Anticipated sales volume How will the location contribute to your sales volume?
• Accessibility to potential customers Consider how easy it will be for customers to get into your business. If you are relying on strong pedestrian traffic, consider whether or not nearby businesses will generate foot traffic for you.
• The rent-paying capacity of your business If you've done a sales-and-profit projection for your first year of operation, you will know approximately how much revenue you can expect to generate, and you can use that information to decide how much rent you can afford to pay.
• Restrictive ordinances You may encounter unusually restrictive ordinances that make an otherwise strong site less than ideal, such as limitations on the hours of the day that trucks can legally load or unload.
• Traffic density With careful examination of food traffic, you can determine the approximate sales potential of each pedestrian passing a given location. Two factors are especially important in this analysis: total pedestrian traffic during business hours and the percentage of people likely to patronize your food service business.
• Customer parking facilities The site should provide convenient and adequate parking, as well as easy access for customers.
• Proximity to other businesses Neighboring businesses may influence your store's volume, and their presence can work for you or against you.
• History of the site Find out the recent history of each site under consideration before you make a final selection. Who were the previous tenants, and why are they no longer there?
• Terms of the lease Be sure you understand all the details of the lease, because it's possible that an excellent site may have unacceptable leasing terms.
• Future development Check with the local planning board to see if anything is planned for the future that could affect your business, such as additional buildings nearby or road construction.
• Appearance It's important that the building or site be attractive and inviting in order to draw customers.

Once you've chosen a location, it's time to nail down the particulars of your food-service business.

4. Create a menu

As you put together a plan for your food-service business, stay up-to-date on the "it" foods of the moment, but don't go chasing fads or trends. Let these inform your menu, rather than dictate it. At the same time, be sure to keep the kids in mind as you plan your selections. If families are a key part of your target market, you'll want a range of four or five items in smaller portions that youngsters will enjoy. While most restaurants still offer fixed kids' meals, you might consider allowing your young diners to choose among a selection of nutritious options.

Your menu should also indicate what dishes can be prepared to meet special dietary requirements, and be sure to offer alternative protein options for vegans, vegetarians and pescetarians (with these noted on the menu).

Though menu variety has increased over the years, menus themselves are growing shorter. Busy consumers don't want to read a lengthy menu before dinner; dining out is a recreational activity, so they're in the restaurant to relax. Keep your number of items in check and menu descriptions simple and straightforward, providing customers with a variety of choices in a concise format. It also makes things easier in the kitchen: fewer recipes to memorize, fewer ingredients to source, etc. The simpler the menu, the easier it'll be to turn crazy dinner rushes and make it through particularly stressful services.

5. Hire employees

One of the biggest challenges — for businesses in all industries — is a lack of qualified labor. As the food-service industry continues to grow, the demand for workers in an already diminished labor pool is also increasing. Finding qualified workers and rising labor costs are two key concerns for food-service business owners .

Related: How to Know When to Hire Your First Employee

The first step in developing a comprehensive HR program is to decide exactly what you want someone to do. The job description doesn't have to be as formal as one you might expect from a large corporation, but it needs to clearly outline the job's duties and responsibilities. It should also list any special skills or other required credentials, such as a valid driver's license and clean driving record for someone who is going to make deliveries for you.

Next, you need to establish a pay scale. You should do research to find out what the pay rates are in your area. You'll want to establish a minimum and maximum rate for each position. You'll pay more even at the start for better qualified and more experienced workers. Of course, the pay scale will be affected by whether or not the position is one that is regularly tipped. Your payroll costs, including your own salary and that of your managers, should be about 24 to 35 percent of your total gross sales.

Every prospective employee should fill out an application — even if it's someone you already know, and even if that person has submitted a detailed resume. A resume is not a signed, sworn statement acknowledging that you can fire the person if he or she lies about his or her background; the application, which includes a truth affidavit, is. The application will also help you verify the applicants' resumes, so you should compare the two and make sure the information is consistent.

Here are some tips to help you find and keep great people:

• Hire right Take the time to thoroughly screen applicants. Be sure they understand what you expect of them. Do background checks. If you can't do this yourself, contract with an HR consultant to do it for you on an as-needed basis.
• Create detailed job descriptions Don't make your employees guess about their responsibilities .
• Understand wage-and-hour and child labor laws Check with your own state's Department of Labor to be sure you comply with regulations on issues such as minimum wage (which can vary depending on the age of the workers and whether they're eligible for tips), and when teenagers can work and what tasks they're allowed to do.
• Report tips properly The IRS is very specific about how tips are to be reported; for details, check with your accountant or contact the IRS .
• Provide initial and ongoing training Even experienced workers need to know how things are done in your restaurant. Well-trained employees are happier, more confident and more effective. Plus, ongoing training builds loyalty and reduces turnover. The National Restaurant Association can help you develop appropriate employee training programs, and groups such as The LEE Initiative run programming to promote healthy kitchen environments.

There are several categories of personnel in the restaurant business: manager, cooks, servers, busboys, dishwashers, hosts and bartenders. When your restaurant is still new, some employees' duties may cross over from one category to another. For example, your manager may double as the host, and servers may also bus tables. Be sure to hire people who are willing to be flexible in their duties.

Standard restaurant roles

Manager The most important employee in most restaurants is the manager. Your best candidate will have already managed a restaurant or restaurants in your area and will be familiar with local buying sources, suppliers and methods. You'll also want a manager with leadership skills and the ability to supervise personnel while reflecting the style and character of your restaurant.

To get the quality of manager you want, you'll have to pay well. Depending on your location, expect to pay a seasoned manager $50,000 to $60,000 a year, plus a percentage of sales. An entry-level manager might earn $40,000 to $45,000 but won't have the skills of a more experienced candidate. If you can't offer a high salary, work out a profit-sharing arrangement — it's an excellent way to hire good people and motivate them to build a successful restaurant. Hire your manager at least a month before you open so they can help you set up your restaurant.

Chefs and cooks When you start out, you'll probably need three cooks — two full time cooks and one part time. Restaurant workers typically work shifts from 10 a.m. to 4 p.m. or 4 p.m. to closing. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One full-time cook should work days, and the other evenings. The part-time cook will help during peak hours , such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation. Cooking schools can usually provide you with leads to the best in the business, but look around and place ads online before you hire. Customers will become regulars only if they can expect the best every time they dine at your restaurant. To provide that, you'll need top-notch cooks and chefs.

Salaries for chefs and cooks vary according to their experience and your menu. Chefs command salaries significantly higher than cooks, averaging $55,000/year. You may also find chefs who are willing to work under profit-sharing plans. You can pay part-time cooks on an hourly basis; check around for the going rate in your area.

Servers Your servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 5:30 or 6 p.m.

Because servers in most establishments earn a good portion of their income from tips, they're usually paid minimum wage or just over it. When your restaurant is new, you might want to hire only experienced servers so you don't have to provide extensive training. As you become established, however, you should develop training systems to help both inexperienced employees and veteran servers understand your philosophy and the image you want to project.

6. Market and promote your restaurant

Every business needs a marketing plan , and your food-service business is no exception. As you consider various marketing vehicles, consider the loyalty program. Research conducted by the National Restaurant Association found that 78% of customers are more likely to visit a restaurant where they can earn loyalty points.

Word of mouth and earned media are also strong ways to earn business, so make the foundation of your marketing program an absolutely dazzling dining experience that customers will want to talk about and repeat. Ask every new customer how they found out about you, and make a note of this information to track how various marketing efforts are working. You can then decide to increase certain programs and eliminate those that aren't working.

A key question for restaurant owners is this: Do your marketing materials — menus, signs, table tents, social media posts, ads and other items — send an accurate message about who you are and what you do?

The first step in creating a complete marketing package is to know your market, and it's not enough to gather demographic information once. Markets change, and food-service businesses that don't change their marketing strategies with population shifts are missing out on a lot of opportunities. Next, consider every element in your facility — the parking lot, interior decorations, printed items, etc. — to make sure they contribute to your marketing message.

One cheap and easy way to promote your food-service business is by building a presence on social media and giving away gift certificates, such as dinner for two or a free pizza. After all, promotions are one of the 7 Ps of marketing . Post weekly specials, host contests, engage with followers and give patrons a behind-the-scenes look at running your business — cooking tips, kitchen hacks, signature recipes. You can also connect with local social media influencers to visit your restaurant and post the delicious results (food videos are especially popular on platforms such as Instagram and TikTok).

Consider donating coupons and gift certificates to be used as door prizes at professional meetings or for nonprofit organizations to use as raffle prizes. Just be sure every coupon or gift certificate clearly identifies your business name, location, hours of operation and any restrictions on the prize. Some other promotional methods you can try include local event or sporting team sponsorships, discount coupon books, frequent-dining clubs, menu promotions and contests.

7. Choose an efficient layout

Layout and design are major factors in your restaurant's success. As you factor it into your startup costs, you'll need to take into account the size and layout of the dining room, kitchen space, storage space and office. Typically, restaurants allot 45 to 65 percent of their space to the dining area, approximately 35 percent to the kitchen and prep area, and the remainder to storage and office space.

Dining area This is where you'll be making the bulk of your money, so don't cut corners when designing your dining room. Visit restaurants in your area and analyze the décor. Watch the diners. Do they react positively to the décor? Is it comfortable or are people shifting in their seats throughout their meals? Note what works well and what doesn't.

To accommodate the different groups of customers, use tables for two that can be pushed together in areas where there is ample floor space. This gives you flexibility in accommodating both small and large parties. Place booths for four to six people along the walls.

Production area

Too often, the production area in a restaurant is inefficiently designed, resulting in a poorly organized kitchen and less than top-notch service. Keep your menu in mind as you determine each element in the production area. You'll need to include space for receiving, storage, food preparation, cooking, baking, dishwashing, production aisles, trash storage, employee facilities and an area for a small office where you can perform daily management duties.

Arrange your food production area so that everything is just a few steps away from the cook. Your design should also allow for two or more cooks to be able to work side by side during your busiest hours.

Dealing with customers and playing the role of elegant host are only part of a restaurateur's many duties. Food-service business operators spend most of their time developing menus; making sure their operation is in compliance with a myriad of local, state and federal regulations; ordering inventory and supplies; managing personnel; creating and implementing marketing campaigns; completing a wide range of paperwork; and performing other administrative chores. There are fun aspects of working in restaurants, but starting, running and growing a food-service business is also hard work.

Regardless of the type of food-service business you intend to start, successful restaurateurs agree that the best preparation for owning a restaurant is to work in someone else's first. Doing so will give you significant insight into the realities and logistics of the business. Think of it as getting paid to be educated. Certainly you should read books and take courses, but you should also plan to work in a restaurant for at least a few years doing as many different jobs as possible. And if you're not actually doing the job, pay attention to the person who is — you may find yourself doing it when your own restaurant is unexpectedly shorthanded.

Ideally, you should work in a restaurant similar to the type you want to open. You might find you don't like the business or realize you're more suited to a different type of operation. Regardless, you'll learn a lot — about the industry and yourself.

"As soon as I started working in a restaurant, I realized this was my passion," says restaurateur Scott Redler. "When you have a busy restaurant, and you're watching everything happen as it should, it's just a wonderful feeling of satisfaction."

Redler has worked in restaurants for more than four decades, first opening a Chinese fast-food joint at the age of 26. That venture failed within eight months, after which Redler went to work for a large restaurant company, where he eventually advanced to the position of senior vice president and oversaw 15 operations. But he still yearned for his own place, so he developed the concept that became Timberline Steakhouse & Grill in Kansas (which he sold in 2011). He recognized that the fast-casual segment was gaining momentum, so he created Freddy's Frozen Custard, which offers hot dogs, hamburgers and custard. Freddy's Frozen Custard is now a franchise operation with more than 500 stores in 36 states.

Most regulatory agencies will work with new operators to let them know what they must do to meet the necessary legal requirements. Your state's general information office can direct you to all the agencies you'll need to be concerned with.

Starting and opening a restaurant can be an exciting, rewarding, and sometimes overwhelming experience. When done correctly, the benefits will far outweigh any anxieties that may come along with it. With proper planning and research, you will have the necessary tools to make your dream of owning a successful eatery a reality.

• Start Your Own Restaurant and More by Rich Mintzer and the Staff of Entrepreneur Media : Entrepreneur's official guide describes the ins and outs of starting and running a successful restaurant, pizzeria, coffeehouse, deli, bakery or catering service. Packed with tips on how to keep your restaurant growing and healthy, the book answers most commonly asked questions and covers the essential business basics.
• National Restaurant Association (NRA) : Founded in 1919, the NRA is the leading business association for the restaurant industry. Its site offers access to an information service and library, various publications and industry research. It also provides networking opportunities and training, and emphasizes the ways in which local restaurants can contribute to their communities.
• National Restaurant Association (NRA) Educational Foundation : This nonprofit organization is dedicated to fulfilling the NRA's educational mission. The site offers classes for professionals and listings of U.S. food safety laws and training requirements. Where available, county and municipal requirements are also listed.
• SCORE : To get some practical, real-world advice, contact SCORE and ask to speak with small business counselors who owned or managed a restaurant. Find offices or counselors in your area by visiting the website.
• Women's Foodservice Forum (WFF) : The WFF is dedicated to providing women in the food-service industry with the resources to succeed. It offers leadership development programs, market research and a regional partnership program for networking. The site also provides answers to FAQs, advice and a community of peers.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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Writing a restaurant business plan.

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Introduction

If you're considering opening a restaurant, your first step should be writing a business plan. A well-written business plan can help you raise money, manage your restaurant and succeed. Here's what you need to know about writing one:

Executive Summary

An executive summary is a short but powerful document that can help you to get your point across quickly and effectively. Although it is usually the first section of a business plan, it should be the last piece written. It should be one page at maximum and clearly describe your business plan's critical points in a way that makes sense to anyone who reads it. The purpose of an executive summary is to convince potential investors or lenders that they will profit from investing in your restaurant idea, so avoid unimportant details or lengthy descriptions of how great your food tastes.

An excellent way to write an executive summary is by starting with an introduction paragraph that summarizes what the rest of your plan contains—this helps readers understand why they should continue reading further into the document. Then go into discussing why this particular project is worthwhile; why people need it. How will it benefit them? Next comes some background information about yourself: include any relevant experience or education related to running this business. Finally, end with future goals: where do you see yourself after opening the shop?

Here are some items to include in your restaurant business plan:

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Best covid-19 travel insurance plans, concept validation and business model testing.

Before you launch your business, it's important to validate your concept and test the viability of your business model. You can do this by conducting market research, talking with potential customers, and interviewing industry experts with similar business experiences. You can also test the viability of your plan by completing an "experience economy" analysis. That is, looking at ways people enjoy spending money on experiences rather than goods (such as dining out). For example, if people value experiences over material goods, opening a restaurant may be a good idea!

Labor Costs and Staffing Plan

Labor costs, including direct and indirect labor, are essential to your labor budget. Direct costs refer to wages paid directly to employees, while indirect expenses include benefits like healthcare coverage and payroll taxes. To calculate these figures, you'll need to estimate the number of full-time equivalents (FTE) positions you'll need and their average salaries. This calculation can be tricky because each restaurant has its unique staffing plan based on its size, location, cuisine type, and reputation among customers, not to mention any other factors that might affect staffing decisions (e.g., whether it's open 24/7).

The first step is deciding whether or not you want full-time staff or part-time workers who work only during peak times such as lunchtime rush hour or Friday night dinners out with friends at restaurants nearby yours. As tempting as it may seem, wait to write anything down until after reading through the following sections because several factors are explicitly related to determining how many people we'll need overall.

You want your menu to be focused and simple. Try to add only a few items, as too many menu items may confuse customers, making it difficult for them to choose what they want.

If there are any "signature" items on your menu, include them first when listing off your offerings so that people know what kind of food you serve before even stepping inside the restaurant. Also, incorporating local ingredients into these specialties will help build community spirit around supporting local businesses.

Site selection is a critical factor in your success. After conducting a comprehensive market study, the site selection is based on the data you discover to determine if your customers are in and frequent that area. David Simmonds, Founder and CEO of ResolutRE , a Commercial Real Estate firm in Austin, Texas, states: "More than ever, entrepreneurs opening a restaurant need to analyze what their own customers look like on paper (demographics, psychographics, etc.), so then when they are examining a market, they can find the highest concentration of their customers within that market. From that data, they are able to determine the number of restaurants that the market could support, and from there, create the blueprint for their expansion."

Your plan should describe your ideal location . Your chosen location must be close to your target market and similar businesses, such as restaurants or cafes. The site should also have high foot traffic and be accessible by car, bike, and public transportation. Simmonds goes on to say: "Analytics reinforces or disputes instincts. It is a necessary part of the expansion process, whether the restauranteur has 1 unit or 37.

Marketing Strategy

When developing your business plan, think about the marketing strategy you will use. Your plan should consider and explain the following marketing tactics:

• Advertising: You can use print or online ads on social media sites like Facebook and Instagram. Also, consider running commercials on local television stations.
• Public relations: This can include writing articles about your restaurant in local newspapers or magazines, hosting events at your restaurant (such as wine tastings), speaking at community events like Chamber of Commerce meetings with other business owners in the area, participating in charity events related to foodservice industries like Feeding America—the possibilities are endless! The idea is to get people talking about what makes YOU unique so they think of YOU first when ready for their next dine-out experience!
• Social media: Let's face it—most millennials don't even pick up the phone anymore; they prefer texting over talking face-to-face because it feels intimate somehow, and guess what? By interacting directly with customers through social media platforms like Facebook Messenger or WhatsApp (which allows users from all over the world access 24 hours per day, seven days per week), we can offer immediate customer service support during high-demand times such as weekend brunch hours without having employees sitting idle during slow periods throughout weekdays when traffic drops off significantly due the lack of demand generated elsewhere.

Profit and Return on Investment Analysis

• Profit is the difference between your sales revenue and your costs. To calculate it, you need to know the following:
• Sales revenue (how much money you expect to make from selling food)
• Cost of goods sold (the cost of ingredients and supplies)
• Other operating expenses (including labor, rent, and utilities)

The reader of your business plan should be able to find these numbers in your budgeting worksheet and financial projections spreadsheet.

Financial Plan

The financial plan is the most critical part of your business plan. It should clearly show how much money you need to start, run and grow your restaurant.

You will need to show a projected profit and loss statement. The projected profit and loss statement (P&L) shows how much revenue comes in, what expenses are incurred, and what profits are made over time. In addition, the P&L shows all revenue sources, including but not limited to sales of food/alcoholic beverages and income from private parties. It must also project all costs associated with operating the restaurant, such as Cost of Goods (raw materials) and salaries for employees - these include both front-of-house roles such as waiters or bartenders, as well as back-of-house roles like chefs who prepare food during off hours so it can be served fresh upon opening each day - cleaning supplies needed throughout each week, etc., depreciation costs associated with long term assets such as ovens that wear down over time and waste of unused food product.

Multi-Year Projections of Revenue and Costs

Accurate projections are the key to a successful business plan. They help you to understand how much money you will make and how much you will need to make it happen. Projections also help with understanding what your costs will be.

For example, if I were starting a restaurant today and wanted my business plan projections for opening day and going out one, three, and five years.

Then I would look at similar restaurants that serve similar foods, noting their prices, portion sizes, and any specialties they offer, such as breakfast all day or lunch specials every Friday during football season. This research of other restaurants will give you a basis for your projections. Include the documentation of this research in the narrative of the plan.

A Business Plan Is Your Road Map To Success.

A business plan can help you raise money by demonstrating that you have a viable idea for a restaurant. In addition, investors want to see that others are interested in investing in your vision, so they'll be more likely to give you money if they see other investors involved with it as well. An excellent example is when an investor wants to invest but only if another investor does first; this way, both parties feel comfortable investing because they know someone else believes in the project enough to put their own money into it too!

A well-written business plan helps manage restaurants by giving owners information about how much money will be coming in over time, so there aren't any surprises when bills come due every month - which could lead businesses into trouble if left unchecked."

This article has given some insights into how to write a business plan for opening a restaurant. Do your research and learn other aspects of good business plan writing. I know that it can be a lot of work, but I also know that the payoff is worth it. Not only will you have a better understanding of what it takes to open up shop and run it successfully but also potential investors will be more likely to fund your project if they see that you've done your research. And remember: don't be afraid to ask other restaurant owners for help or advice; many of them have been where you are now.

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How to write a restaurant business plan

A small restaurant business plan is the roadmap you use to open a successful spot. As a first step to creating yours, ask your friends and colleagues to share restaurant business plan examples. Their restaurant business plan samples can inspire yours.

Once you’ve studied those examples, it’s time to start writing your own. No matter how much thought you’ve put into your concept or how many trusted colleagues have assured you of its greatness, you must write a restaurant business plan. It will prove the viability of your concept to potential investors and provide them with a clear and engaging answer to the question: “Why does the world need this restaurant?”

“The point of a business plan is to show that you’ve done your homework,” says Charles Bililies, owner of Souvla , a fine casual Greek restaurant in San Francisco that has received national acclaim since opening in the spring of 2014.

“You have to show any potential investor that you have an actual plan, you know what you’re talking about, it looks professional, and you’re not just screwing around.”

Quick links Branded cover Table of contents Concept Sample menu Service Management team Design Target market Location Market overview Marketing and publicity Specialists and consultants Business structure Financials

1. Branded cover

Include your logo (even if it’s not finalized), the date, and your name.

2. Table of contents

A table of contents in a restaurant business plan provides an organized overview of the document’s structure and content. It typically appears at the beginning of the plan and lists the major sections and subsections with their corresponding page numbers.

The table of contents is important for several reasons. Firstly, it allows readers to quickly navigate through the plan, enabling easy access to specific sections of interest. Secondly, it helps in presenting a professional and well-structured document, showing that you have carefully organized your thoughts and ideas. It also improves readability and comprehension, as readers can easily locate and refer back to relevant information

3. Restaurant concept

Describe your restaurant concept and get the reader excited about your idea. Specify whether the restaurant will be fine dining or more casual. Include an executive summary and go into detail about the food you’ll be serving, inspiration behind your concept, and an overview of service style.

Define clearly what will be unique about your restaurant and include your mission statement. This section should include a market analysis that shows how your restaurant will be similar and different from competing restaurants.

4. Sample menu

The menu is the most important touchpoint of any restaurant’s brand, so this should be more than just a simple list of items. Incorporate your logo and mock up a formatted menu design (tap a designer for help if needed).

Your sample menu should also include prices that are based on a detailed cost analysis. This will:

• Give investors a clear understanding of your targeted price point
• Provide the info needed to estimate check averages
• Show the numbers used create financial projections for starting costs
• Show investors that you’ve done the homework
• Prove you can stay within a budget

This section is most relevant for:

• Fine-dining concepts
• Concepts that have a unique service style
• Owners who have particularly strong feelings about what role service will play in their restaurant.

It can be a powerful way of conveying your approach to hospitality to investors by explaining the details of the guest’s service experience.

Will your restaurant have counter service and restaurant hostess software designed to get guests on their way as quickly as possible, or will it look more like a theater, with captains putting plates in front of guests simultaneously?

If an extensive wine program is an integral part of what you’re doing, will you have a sommelier? If you don’t feel that service is a noteworthy component of your operation, address it briefly in the concept section.

6. Management team

Write a brief overview of yourself and the team you have established so far. You want to show that your experience has provided you with the necessary skills to run a successful restaurant and act as a restaurant business owner.

Ideally, once you have described the strong suit of every member of your team, you’ll be presenting a full pitch deck. Most independent restaurant investors are in this for more than just money, so giving some indication of what you value and who you are outside of work may also be helpful.

Incorporate some visuals. Create a mood board that shows images related to the design and feeling of your restaurant.

Whether you’re planning to cook in a wood-burning oven or are designing an eclectic front-of-house, be sure to include those ideas. Photos of materials and snippets of other restaurants that you love that are similar to the brand you’re building are also helpful.

8. Target market

Who is going to eat at your restaurant? What do they do for a living, how old are they, and what’s their average income? Once you’ve described them in detail, reiterate why your specific concept will appeal to them.

9. Location

There should be a natural and very clear connection between the information you present in the “Target Market” section and this one. You probably won’t have a specific site identified at this point in the process, but you should talk about viable neighborhoods.

Don’t assume that potential investors will be familiar with the areas you’re discussing and who works or lives there—make the connections clear. You want readers to be confident that your restaurant’s “ideal” diner intersects with the neighborhood(s) you’re proposing as often as possible.

If you don’t have a site , this is a good place to discuss what you’re looking for in terms of square footage, foot traffic, parking, freeway accessibility, outdoor seating , and other important details.

10. Market overview

Address the micro and macro market conditions in your area and how they relate to licenses and permits. At a macro level, what are the local and regional economic conditions?

If restaurants are doing poorly, explain why yours won’t; if restaurants are doing well, explain how you’ll be able to compete in an already booming restaurant climate. At a micro level, discuss who your direct competitors are. Talk about what types of restaurants share your target market and how you’ll differentiate yourself.

11. Marketing and publicity

The restaurant landscape is only getting more competitive. Discuss your pre- and post-opening marketing plans to show investors how you plan to gain traction leading up to opening day, as well as how you’ll keep the momentum going.

If you’re going to retain a PR/marketing company, introduce them and explain why you’ve chosen them over other companies (including some of their best-known clients helps). If not, convey that you have a solid plan in place to generate attention on your own through social media, your website , and media connections.

12. Specialists and consultants

List any outside contractors you plan to retain, such as:

• General contractor
• PR and marketing

Briefly explain the services they’ll be providing for you, why you chose them, and any notable accomplishments.

13. Business structure

This section should be short and sweet. What type of business structure have you set up and why did you make that specific decision? You will need to work with an attorney to help you determine what business structure is best for you.

“Step one: write a business plan. Step two: hire a good attorney. In addition to helping me build a smart, sustainable business structure, my attorney was also a great resource for reviewing my business plan because she’s read thousands of them. She was a very helpful, experienced outside perspective for more than just legal matters,” says Charles Bililies.

14. Financial projections

Let your accountant guide you through this portion of your business plan. It is crucial that whoever you hire to help you with your finances has a wealth of restaurant experience (not just one or two places). They should be familiar with the financial specifics of starting a restaurant and know what questions to ask you.

Before creating realistic financial projections, your accountant will want to know:

• How many seats the restaurant will have
• What your average check will be
• How many covers per day you plan to do

Being conservative in these estimations is key. These three data points will be used as the basis for figuring out whether your concept is financially feasible.

Lou Guerrero, Principal at Kross, Baumgarten, Kniss & Guerrero, emphasizes, “You’ll get a lot of accountants that tell you that they’ve done a couple of restaurants, but you have to choose someone that has a deep expertise in what you’re doing. There’s nothing to gain from going with someone that doesn’t have a very restaurant-centric practice.”

A well-vetted accountant with restaurant experience will know exactly what you’ll need to have prepared to show investors.

The key projections you can expect to work on are:

• Pro forma profit and loss statement for the first three to five years of operation
• Break even analysis
• Capital requirements budget

Writing a comprehensive restaurant business plan is a crucial step towards opening a successful establishment. By seeking inspiration from examples, demonstrating your expertise, and addressing all the essential components, you can prove the viability of your concept to potential investors.

Remember, a well-prepared business plan demonstrates professionalism and a clear understanding of your goals, increasing your chances of achieving long-term success in the competitive restaurant industry.

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How to Write a Restaurant Business Plan in 2024 (Free Template)

So you want to open a restaurant? Then you need a business plan.

A restaurant business plan is your roadmap to success. It outlines and forecasts every aspect of your restaurant’s operation and management —from menu design and location to financial planning and staff training. A comprehensive restaurant business plan demonstrates professionalism and a clear understanding of goals, increasing your chances of achieving long-term success in the competitive restaurant industry.

Why is a strong business plan important? Because it turns your restaurant idea into reality. According to the National Restaurant Association , having a business plan increases your chances of success by preparing you for problems before they arise and attracting investors and partners.

Planning is the key to restaurant success. Without a plan, you risk being part of the 30% of restaurants that fail in the first year​. To make sure your restaurant succeeds, you can start by creating a business plan. Financial projections are a crucial component, helping to secure funding and plan for the future. Here’s how to get started.

The importance of a restaurant business plan 

Think of your business plan as your ultimate guide, showing business owners, stakeholders, and investors how you’re going to turn your vision into reality. It ensures nothing is overlooked as you grow your restaurant . When you’re deep in the chaos of construction, licensing, staffing, and other challenges, your business plan will keep you on track and focused. Without one, navigating the complex world of opening a restaurant becomes much tougher.

A solid business plan is also key to attracting investors. Most new restaurants need some outside capital from hospitality investors or silent partners. Before they invest in your dream, they need to see that you’ve got a solid, thought-out plan for success. Your business plan shows investors that you’ve considered every expense and every possible scenario. It provides a complete description of your strategy, highlights the experience and skills of your management team, and explains why and how it will succeed.

Every business should have a business plan, whether new or existing. Business plans help you focus on your goals and can help get back on track if you stray from them.

• How to write a restaurant business plan

Whether this is your first business plan or your 10th, using a template specifically designed for the restaurant industry can be incredibly helpful. Our restaurant business plan template includes all the necessary sections you need. You can download a customizable copy of the business plan template here.

Conducting a thorough market analysis to understand customer demographics and competition is crucial for the success of your restaurant. Keep reading to learn about the key elements that make a restaurant business plan successful.

Further reading

• How to Write a Restaurant Business Plan Executive Summary
• Your Complete Guide to Restaurant Financing and Loans
• How To Conduct a Restaurant Market Analysis
• Essential elements of a restaurant business plan

Design a branded cover page

Start with a branded cover page that showcases your logo, brand fonts, and all relevant contact information. This sets a professional tone and makes your business plan easily identifiable.

Write the executive summary

Begin your restaurant business plan with an executive summary . This section introduces and sums up your entire vision, making sure to grab the reader’s attention. It should make investors feel invested in your idea and eager to read more.

Key elements to include are your restaurant’s mission statement , proposed concept, how you’ll execute the plan, an overview of potential costs, anticipated return on investment, as well as a business succession plan. Describe your restaurant concept, detailing the type of food being served, service style, design elements, and unique features. This is also a great spot to highlight your business’s core values. A strong executive summary sets the tone for your business plan and helps attract investor interest.

Additionally, include a management team write-up to highlight the credentials and past experiences of your management team, demonstrating their ability to run a successful establishment.

A well-conceived mission statement can provide a guiding light to keep your restaurant moving in the right direction. It helps ensure that every decision you make and every interaction you have is in line with your core values and goals.

Create the company overview

In this section, you’ll lay out the foundational details of your restaurant. Start by introducing the basic information: the restaurant’s name, address, and contact details. Include information about the owner and their background, showcasing their experience and passion for the industry. This sets the stage for your business’s credibility.

Next, describe the restaurant’s legal standing and its short- and long-term objectives. This helps potential investors understand the structure and vision of your business.

Highlight your understanding of the local food industry with a brief market research summary. Explain why your restaurant will succeed in this market by demonstrating awareness of local dining trends and consumer preferences. Crafting your own restaurant business plan is crucial to showcase your dedication and strategic planning, learning from others' mistakes to ensure success.

Here’s a sample layout for this section:

Company description

Restaurant Name : [Restaurant Name]

Location: [Restaurant Address]

Contact: [Restaurant Phone Number] | [Restaurant Email Address]

Owner: [Owner Name]

Experience: [Owner Name] has over [Number] years of experience in the restaurant industry. They have worked in various roles, including [List of Roles]. They are passionate about food and creating a memorable dining experience for their guests.

Legal Standing: [Restaurant Name] is a [Type of Legal Entity] registered in [State/Province].

• How to Write a Great Restaurant Description

Include an industry analysis

First describe the current state of the market sector your restaurant will be in and the specific area you will be in. This should include local economic growth, existing restaurants, infrastructure projects, nearby businesses, residential areas and foot and car traffic counts.

To create an effective and professional business plan, it is important to study restaurant business plan samples.

1. Review your target market

The restaurant industry is competitive so you need to find your niche. What will make your restaurant different? Who will your restaurant attract and who will be your repeat customers? Describe your target market and compare it to the overall restaurant industry in terms of diner demographics, characteristics and behaviour.

2. Location analysis

Even if you don’t have a specific location yet, focus on the general area or city where you will be opening your restaurant and explain why. Include local economic growth, major events and nearby infrastructure projects. Compare the current market conditions to your target market to show the proposed location fits your ideal customer profile. Investors will be looking closely at this section to make sure the location is right for your concept.

3. Competitive analysis

Get into the competitive landscape around your proposed location. Detail the number of other restaurants in the area, especially those with similar concepts. Investors want to know what will make customers choose your restaurant over the competition. What will make your food and service stand out and what other advantages do you have, like longer hours? Use a competitive matrix to show you understand your niche in the market.

Put together a restaurant marketing plan 

The marketing section outlines how you’ll promote your restaurant before and after opening. Not sure where to start? Check out our guide here. A well-thought-out marketing plan is crucial to grow a successful restaurant and distinguish it from competitors.

Start by listing out specific tactics you’ll use pre and post-launch. Will you work with a PR manager? Launch a social media account to document the build-out and generate buzz. Share those details. If you already have a large social media following , make sure to mention it.

Once the restaurant is open , which channels will you use to keep the momentum going? Email marketing? Regular social media posts? Charity partnerships? Local TV and radio ads? Will you invest in customer relationship management software to keep in touch with regulars or implement a loyalty program?

This section should give a clear picture of your promotional strategy and how you plan to engage with potential customers from the start.

Outline your operation plan

Here’s how to outline your restaurant’s day-to-day operations once the doors open. Cover these key areas:

Clearly defining the service style of your restaurant, whether it is fine dining , quick-service, self-service, or another type, is important to ensure a consistent customer experience.

1. Staffing

Think about the positions you'll need and how many people you'll need for each role. What will make your place a fantastic workplace? Outline the pay for each position, how you'll recruit the right people, and what the hiring criteria will be.

2. Customer service policies and procedures

How will you ensure an exceptional and consistent guest experience every time? Detail your service values, policies, and procedures, and explain how you'll enforce or encourage them.

3. Restaurant point of sale and other systems

How will you keep track of sales and inventory, manage takeout and delivery, control labor, handle cash, process payroll, and accept various payment types? Cover the systems you'll use for all these tasks.

4. Suppliers

Where will you get your ingredients? Think about both one-time equipment purchases and items that need regular replenishment. Detail your plans for sourcing these essentials.

Nail down your financial game plan with first-year projections

The financial analysis usually wraps up your business plan, and it’s where investors really focus in. They want to see exactly how you’ll spend their money in the first year and how you expect costs and revenue to stack up. Make sure to hit these key points in this section.

1. Your investment plan

Here’s where you put in the initial investment and how you’ll use it in the first year. Think kitchen equipment, furniture, decor, payroll, legal fees, marketing, and a bit of working capital.

2. The projected profit and loss (P&L) statement

Since the business plan is done way before you open your restaurant you’ll need to make some educated guesses for your P&L statement. Estimate costs and sales based on your restaurant’s size, target market and the local competition. Use this P&L template and guide to dive deeper into P&L statements and create one for your future restaurant.

3. The break-even strategy

This is where you show investors how much monthly revenue you’ll need to cover all your overhead and operational costs. Remember there are always variable costs so highlight what you think those will be. How will you hit that revenue target during slow months?

4. Cash flow prediction

Your cash flow expectations hinge on your inventory purchases, staff size, payroll, and payment schedule. Some months will be better than others once your restaurant is up and running. This cash flow analysis will show investors that, based on your forecasts, your restaurant can sustain itself during leaner months without needing extra investments.

How to sell a restaurant idea and master your business plan presentation

Once your business plan is polished and ready, it's time to become its number one expert. Investors want to see that you know every nook and cranny of your business and are confident you can make it happen.

When you're ready, email your business plan to anyone in your network who might be interested in investing. With any luck, you'll get some interest, and investors will want to meet to discuss your restaurant.

Some investors might want a pitch presentation alongside the printed business plan. Use a professional template from Google Sheets or PowerPoint, and practice until you can nail the presentation without notes.

Be prepared for any questions—both the expected ones and those that come out of left field. If you don’t know an answer on the spot, it’s fine to say you’ll find out and get back to them quickly.

A well-crafted restaurant business plan serves as a roadmap to success, guiding every aspect of the venture from menu design to employee training.

By carefully considering each component of the plan, aspiring restaurateurs can increase their chances of securing funding, attracting customers, and achieving their long-term goals. Including a sample menu in the business plan is necessary to showcase planned dishes and prices, which helps in selling the restaurant concept to potential investors and customers.

Remember, a restaurant business plan is not just a document to satisfy investors; it is a living tool that should be revisited and updated regularly as the business grows and evolves.

By staying committed to the plan and adapting it as needed, restaurateurs can ensure that their culinary dreams have a solid foundation for success.

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How much profit does the restaurant make.

When it comes to restaurant profitability, the numbers can widely vary. On average, restaurants report profit margins between 3% and 5% annually.

Fast-food establishments often have lower margins but benefit from a high volume of customers and quick turnover rates. In contrast, fine dining venues, although charging higher prices, see fewer customers and slower turnover, which influences their profit margins differently.

Our research indicates that, regardless of the type of restaurant, the average monthly profit usually falls between $15,000 and $25,000.

How to open a restaurant without money?

Starting a restaurant can be a daunting task, especially when funds are tight. However, with some creativity and determination, you can turn your dream into a reality. Here’s how:

Innovate Your Restaurant Concept

Consider a unique, low-cost restaurant concept. Instead of a full-scale establishment, perhaps a pop-up restaurant or a delivery-only kitchen could better fit your budget. Flexibility in your concept can significantly reduce initial costs.

Seek Funding Alternatives

Traditional bank loans aren't the only option. Look for investors who believe in your vision or explore crowdfunding platforms like Kickstarter or GoFundMe . Sometimes, you can even find grants aimed at smal l business startups.

Leverage Online Platforms

Start by building a strong online presence. Create a website and utilize social media to attract and engage customers. Online marketing can be a cost-effective way to generate buzz and gather a customer base before you even open your doors.

Collaborate with Other Businesses

Partnerships can pave the way for mutual growth. Collaborate with food suppliers, local farms, or even other small businesses to share costs and resources. This strategy can also expand your network and increase visibility within your community.

Start Small: Food Trucks or Catering

Consider launching your concept through a food truck, catering service, or pop-up stand. These options require significantly less capital than a traditional sit-down restaurant and can help you build your brand and customer base.

Growth Marketing Manager at Eat App

Saif Alnasur used to work in his family restaurant, but now he is a food influencer and writes about the restaurant industry for Eat App.

Reviewed by

Nezar Kadhem

Co-founder and CEO of Eat App

He is a regular speaker and panelist at industry events, contributing on topics such as digital transformation in the hospitality industry, revenue channel optimization and dine-in experience.

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How To Write A Restaurant Business Plan | A Complete Guide

If you're thinking of opening a restaurant, you need to understand that  having a restaurant business plan in place is the number one priority. A restaurant business plan is just one of the many moving pieces involved in opening a restaurant. It can all look a bit complicated and you may be unsure where to start but thankfully we're here to lend you a helping hand, with our free restaurant business plan!

Here is what you need to know about writing a restaurant business plan.

A high-level a restaurant business plan should include these 13 things.

• Branding, Name & Vision
• Design Concept
• Menu Concept
• Operational Structure
• Restaurant Technology
• Service Style
• Market Research
• Demographic Research
• Location Details
• Marketing Plan
• Launch Plan & Timeline
• Consultants & Specialists
• Financials & Funding

‍ Let's break each section down to take a closer look and bring you one step closer to the restaurant opening of your dreams.

1 - Branding, name & vision.

It’s important to lock in on a concept for your restaurant as soon as possible. The starting point will be to establish your branding, name, and vision. Having a strong brand is crucial to the success of your business plan, and ultimately your restaurant once it opens. Rather than getting swallowed up in the sea of competitive space that is the restaurant industry, a strong restaurant brand will ensure you stand out amongst the others. Your unique restaurant brand will be one of the most valuable elements of your business, which is why it's essential to hone in on this concept early on. Not sure where to start? Here's a step-by-step look at how to build your restaurant brand.

Starting with a mission statement.

There should always be a story behind your restaurant that explains why you decided to enter the industry in the form you did. The process of telling your story comes through the development of additional crucial elements like your values and your mission. To break it down even further, you can begin your story by asking yourself the following questions:

• What is your restaurant?
• What is your restaurant going to do?
• Why is your restaurant going to do this?
• What goals would you like to accomplish?
• How do you plan on achieving these goals?

Position yourself in the market.

Your mission statement is essentially the "why" behind your business. Once you've defined your purpose, you can move on to the "what" and "where”. This process is known as brand positioning and helps to differentiate you from your competition. To begin, you'll need to narrow down your options regarding these four elements: 

Developing your voice.

Developing your brand voice will involve establishing the "how" for your business. This section describes how you plan to communicate with your prospective audience. Think of your brand as an individual—what type of voice would it have in the world? Here's an excellent way to gain perspective:

• Describe your brand using three descriptive words.
• Expand on each word.
• Begin to understand the personality of your brand

Developing the design.

In the age of the internet, appearances are everything, so you want to make sure you take particular time and care in developing the overall look and feel of your brand. The face of your brand goes well beyond the signage on the exterior or a printed logo on your menu. You want to make sure your guests can feel the experience as much as they can see it. Mood boards are a great way to spark your creativity and begin planning this out.

Creating a brand book.

Consistency is vital, and especially so when it comes to branding. You want to make sure that all of your business's branding is consistent, including all online and offline content. In your brand book, you'll want to make sure you cover: ‍

• Do's and don'ts of speaking with media
• Acceptable photos or designs for restaurant promotions
• Fonts and typefaces for logos, menus, and other designs

Remember that developing your restaurant brand will be challenging at first but will help to ease the rest of the process along the way. Your brand will be your compass, your guiding light, ensuring you stay on course and remain authentic to your vision, values, mission, and purpose.

2 - Design concept.

Restaurants provide diners with so much more than a simple meal on a plate. The ideal dining experience should provide an entire vibe, including your interior and menu design concepts. Your design should help your restaurant to stand out from the competition and also draw your customers back time and time again. Check out our menu concept article here for more details. ‍

Even before your target market has an opportunity to hear or read anything you have to say about your restaurant, it's the appearance of your brand that will capture their attention. Understanding the impact of your design concept will help you in the long run, which is why creating vision boards can be incredibly helpful throughout the process.

Using a combination of vision boards and the general personality guidelines of your restaurant, the pieces will begin coming together on their own. Even better, you'll be able to take your concept to your graphic designer to help convey the story of your restaurant to them. 

3 - Menu concept.

Another crucial element to your restaurant business plan will be your menu concept. Check out more on how to create a menu concept in our article here. While you don't have to have all of the details ironed out at this point, it's essential to understand that your concept includes much more than the food you plan on serving. When it comes to designing a restaurant menu, don't forget these crucial steps in the process:

• Deciding on a menu concept.
• Choosing your ingredients.
• Checking out your supply chain.
• Costing out your dishes.
• Visualizing all the details.
• Deciding on a menu design style.
• Running a test kitchen.

4 - Operational structure.

Determining your operational structure is another aspect of your restaurant business plan that should be well thought out. The operations structure of your restaurant will not only anticipate your business demands but should help you to begin costing out each position. Some of the positions you might need to include would be:

• Restaurant General Manager
• Executive Chef
• Sous Chef(s)
• Front of House Staff
• Back of House Staff

5 - Restaurant technology.

In today's world, restaurant technology is no longer a luxury item but rather a necessity for optimizing performance. Technology can play a role in nearly every aspect of your restaurant, so it will be up to you to prioritize its best fit. For example, a small coffee shop might not require such extensive technology as a three-meal restaurant. Then again, if it's a part of your dream, your business plan is the place to help make it become a reality.

Here are some of the restaurant technology resources you might want to consider for your business:

• Point of Sales (POS)
• Hiring and Onboarding
• Workforce Management
• Inventory Management
• Reservations

6 - Service style.

Different service styles impact your guests, but they will affect the back end of your restaurant as well. Carrying out the design and scope of your restaurant, your service style will also impact the payment structures of your operation.

Fundamentally, the four most basic service styles in a restaurant are:

• Fast Food or Quick Service
• Fast Casual
• Fine Dining

Remember that whatever service style you decide on, it should seamlessly align with your brand. If you're not sure how you can stand out, take a look at competitors in the service style you have chosen and see if you can do things better.

7 - Restaurant market research.

Opening a restaurant comes with a lot of research—and not just about food, vendors, and staff. Restaurant owners need to conduct a wide range of market research to help better understand the current business situation in the area.

Some questions you might want to ask yourself and find the answers to are:

• What are competitors in your niche selling or making?
• Are your competitors busy?
• What are your competitors doing well?
• What can your competitors do better?

8 - Demographic research.

In addition to researching the market, you'll also want to get an idea of who your target market is and how to approach them more effectively. Identifying this early on is crucial in developing your voice and understanding how to reach your audience more effectively. ‍ Here are some tips on research points when identifying your target demographic:

• Vegetarian/vegan eating preferences
• Average household income

9 - Location details.

Finding the right location for your restaurant is no easy feat,  but with a decent amount of research under your belt regarding the market and demographic, you should be able to find a location best suited for your restaurant. ‍

Additional factors to consider when looking into your location might be the price differences between renting, leasing, or owning your property. Look into the commercial real estate side of things and see what makes the most sense for your budget, both short-term and long-term.

10 - Marketing plan for your restaurant.

Developing your marketing plan will look very similar to your business plan, with details more specifically honed in on your marketing efforts. To be able to draft your marketing plan, though, you'll need to keep critical items, like your business plan, budget, and priorities, close at hand.

Here's how you can get started:

• Solidifying your brand.
• Reminding yourself of your target audience .
• Performing a Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis.
• Defining your market differentiators.
• Crafting your pitch.
• Prioritizing your marketing objectives.

11 - Launch plan and timeline.

Every solid restaurant business plan should have an appropriate launch plan and timeline associated with it. In this timeline, you should be detailing how you will spend the time leading up to your opening day. There is no one-size-fits-all for launch plans and timelines, but here's a generalized timeline to help get you started. This particular timeline is broken down into weeks and begins 12 weeks before opening day.

• Permitting, Construction, and menu development.
• Branding, security, and corporate identity.
• Tending to back-of-the-house needs.
• Tending to front-of-the-house needs.
• Handling small wares.
• Developing relationships with vendors.
• Bringing on staff.
• Implementing technology.
• Promoting and training of staff.
• Additional training and tasting menu.
• Adding initial inventory.
• Launching a soft opening.
• Opening day.

12 - Consultants and specialists.

Restaurant consultants and specialists can help in a wide range of areas of the opening of your business. Part of your restaurant business plan should include whether or not you plan to seek additional help from these outside sources. If you are unsure of whether or not these services are necessary, take a look at some of the areas of expertise they can cover:

• Franchising
• Selecting property and location.
• Establishing efficiencies in hiring and training.
• Developing menus and pricing.
• Planning finances.
• Aiding with accounting services.
• Designing branding and concepts. ‍

13 - Financials and funding.

To wrap up your business plan, you'll need to touch on the financials and funding side of things. Generally speaking, you can anticipate the average cost of a restaurant startup in a rented building to be just over $3,000 per seat or $275,000. Alternatively, as an owner of your building, the average opening costs increase significantly to $4,000 per seat or $475,000. ‍

Since you will be opening a restaurant, you will incur many one-time costs that can be pretty costly. These costs might include a rental deposit, purchasing equipment, or ordering tables. Additionally, you'll have to account for ongoing expenses of the operation of your restaurant—things like rent, payroll, and utilities.

Thankfully, you don't have to front all of the opening costs alone. There are countless restaurant financing options to consider. Here are some of the more popular options worth researching further:

• Loans from family and friends.
• Purchase order financing.
• Equipment financing.
• Commercial real estate loans.
• Crowdfunding
• Business line of credit.
• Merchant cash advance.
• Small Business Administration (SBA) Loans.
• Alternative Loans.
• Brick-and-Mortar Bank Loans.

Free restaurant business plan, a conclusion.

It's no surprise to find that if you are thinking of opening a restaurant, you need to crack down on the development of your restaurant business plan. With so many moving pieces involved in opening a restaurant, having a solid business plan can help keep you on the right path towards achieving your dreams! We hope this free restaurant business plan was a helpful resource that will help you get the ball rolling!  If you are looking for more helpful insights than just a free restaurant business plan and are ready to take your business to the next step, check out the advice we gathered from top restaurant industry experts on how to open up shop and succeed.

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How To Start a Restaurant

Restaurant365

Opening a restaurant requires not just a love for great food and deep industry knowledge, but a keen understanding of many areas of operations, marketing, and finance. This article walks through the many plans, checklists, and strategies to consider when opening a restaurant.

The restaurant industry is an incredibly competitive landscape and opening a new restaurant is certainly no easy task. Still, tens of thousands of new restaurants open every year in the United States alone. One thing many of them have in common is not just a passion for great food and deep industry knowledge, but a solid understanding of the many additional components that contribute to restaurant success – store operations, labor, marketing, and finance to name a few.

This article is an overview of those areas as well as some best practices to consider.

How to Create a Restaurant Business Plan

A restaurant business plan serves as a comprehensive roadmap, essential for organizing the necessary steps to opening your business. It ensures no details are overlooked during the process, including everything from funding to a breakdown of operating costs and projected sales. This plan is particularly crucial for restaurant operators amid the complexities of licensing, staffing, and other operational challenges unique to the industry.

What Sections to Include in Your Restaurant Business Plan

• Restaurant Industry & Competitive Analysis: The restaurant industry is an incredibly competitive landscape, so understanding the market you’re entering is crucial before you make serious purchases and expenses. An industry analysis involves looking at the local economy, from other local businesses to residential areas and growth. Your competitive analysis looks at other restaurants in the area, specifically those with your cuisine or service type, to see if there’s a viable market for your restaurant.
• Operations Plan: This element of your plant focuses on the day-to-day functioning of your restaurant. It includes considerations on everything from your many vendors to the components of labor costs like your overall headcount, pay rates, and training. As a manager, you'll always want to investigate your associated tasks with this side of the business, like shift scheduling, payroll procedures, labor reporting, and performance. The tech tools that will run all these systems – hiring, scheduling, payroll, etc. – and their associated cost is another area to consider when developing this plan.
• Restaurant Marketing Plan: A restaurant marketing strategy serves as the guiding "why" behind marketing efforts, encompassing the many ways you promote your restaurant, communication methods, and your target audience. This plan shows the many ways you will boost brand awareness, reach new customers, and enhance customer retention for increased sales and profitability.
• Financial Analysis & Growth Plan: Whether you capital is coming from investors or loans, a financial plan is important to understanding the major costs of your restaurant. Investors will expect details on how their initial investment will be spent along with a comparison of costs and projected revenue. You should also develop a projected Profit and Loss (P&L) statement by making an educated guess of costs and sales of your restaurant. This should be done after you've developed your operational plan, so that it's easier to add up the many costs of your restaurant.

Understanding Restaurant Accounting Basics

Accurate accounting is a crucial part of running a successful restaurant that maintains profitability. Whether you’re running accounting in-house through restaurant accounting software or using an outside accounting firm, there’s a lot to get acquainted with as a manager/owner.

Some of these areas include setting up a fiscal calendar, setting up General Ledger (GL) codes, entering Accounts Payable (AP) for cash flow management, and evaluating a budgets based on sales fluctuations. Restaurant accounting can feel overwhelming – many operators outsource this process to accounting firms – but familiarizing yourself with these key components of restaurant accounting is a good place to start.

How Much Does It Cost to Open a Restaurant?

New restaurant concept and design.

It’s important to aligning the design and ambiance of your new restaurant with its concept and customer expectations. Inconsistencies in elements like pricing, attire expectations, and menu choices can deter customers from coming back.

Start by brainstorming some ideas for your restaurant. Identify not only what type of food you’re serving, but also your target demographic and service style. If you’re stuck, try eliminating the things you wont be doing as well.

Once you’ve created a solid concept and restaurant design, share it with some of your fellow industry people. Ask for honest feedback and take it to heart. This is another crucial part of the process to make your concept better!

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Naming Your Restaurant

Naming your restaurant is typically one of the least stressful parts of opening shop. It can be a fun process that makes your restaurant feel “real”, but it should also involve a process. As with your concept and design, choosing a name should involve brainstorming, a few iterations, and some testing. 

Your restaurant’s name should reflect not just your food but you overall brand. What experience are you trying to give customers? What should people envision when they hear your name?

It’s also important to consider existing businesses in your area (not just restaurants). At some point, a large portion of customers will find your restaurant online through search engines and social media. If your name is close to that of another business in the area, it can cause confusion for your customers, particularly early on before you’ve developed a loyal customer base.

Pricing Out Your Menu

Strategic menu planning is a key part of restaurant success, particularly in the context of rising food and labor costs. After you’ve decided on your core menu items, you can start setting price points. Here are a few key considerations when setting those prices.

• Analyze Your Sales Reports & Product Mix (Pmix) : Utilize a product mix (Pmix) to assess the profitability and popularity of each menu item. This involves mapping out items based on sales reports to prioritize, adjust, or remove items for maximum sales and profits.
• Factor in Your Controllable Costs: Focus on prime cost – cost of goods sold (COGS) and labor – to ensure efficient resource utilization. Connect insights from prime costs with Pmix to set accurate menu prices and identify areas for improvement.
• Look at Your Competition: Conduct a competitive analysis to understand what local competitors offer. Differentiate your restaurant by providing clear value if your prices differ. Knowing your territory, community, and customers is crucial for success.

Your restaurant’s menu is more than a list of your dishes and their ingredients. It is a marketing vehicle that can be used to increase item popularity. Through menu engineering , operators can drive a real, measurable impact on the sales and profitability of their restaurant.

Selecting Your POS

With hundreds of options available, choosing the point of sale (POS) system for your restaurant requires a little research. Remember that your POS isn’t just a transaction system but also your central point of engagement with guests, influencing their experience positively or negatively.

Before you research your options, start by assessing the specific needs of your restaurant. These include your service model, data reporting, accessibility, and integration with other tools. Integrating your POS with other areas of your business (back office, accounting) has become increasingly common as restaurants look to create one system that communicates seamlessly.

When deciding on your POS, consider those that were made specifically for restaurants, which tend to have specific features that will be useful to you and your team. You’re probably already familiar with at least a few of these if you’ve worked in the restaurant industry, but explore at least a few options you haven’t used. Read reviews and get a full demo of the system before you make any decisions. They’ll be happy to give you one!

Selecting Your Restaurant Management Software

Each year, restaurants adopt more and more software and allocate more of their budget to tech tools. Since 2020, restaurants spend twice as much of their gross revenue on restaurant technology.

There are an increasing number of restaurant technologies available every year, touching every part of the industry from raw ingredients being delivered to customer feedback after the meal. While these tools are useful, investigate offerings before you commit to a contract. Understand how they integrate with your existing tools and make your operation more streamlined, not more stressful.

Wrapping It Up

It’s easy to feel overwhelmed when taking on something as big as opening a restaurant. With many moving parts, and an incredibly competitive landscape, the industry is certainly not for the faint of heart. It requires not just hard work and a passion for serving great food, but also the willingness to learn about many other disciplines of restaurant management.

Schedule a free demo of Restaurant365 today.

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How to Matter—And Last—in the Restaurant Business

In 2017, everyone wants to open a restaurant. It's one of the hottest industries globally—and Manila is no exception—but it's also one that's hard to figure out. Always in a kinetic state, there are no set rules. Even when a new restaurateur has all the elemts in his/her favor, nothing guarantees success. But when you do find that success, there is nothing quite like it. The satisfaction is immense.

I am a culinary and culinary management graduate of the Institute of Culinary Education in New York, but I am not a chef. After the spectrum of crazy things I’ve done—pop-ups, themed dinners, food events, highly curated themed markets, consultant, an emcee/host, a social media guy, a freelance food writer—I just call myself a food creative. Recently, I also did something I promised myself I would never do: I became a restaurant owner. I’m a part of Makansutra Hawkers in Megamall.

I have special vantage point in the peanut gallery of what's going on in the local food and beverage scene. And if you asked me if you should get into it, I'd say it's crazy. You should think thrice. But if you're really determined, here's some insight that you should know before you get in deep:

1| People are trying to eat healthier.

Trying being the operative word. We cannot deny our love for pork and Spam and all sorts of evilness, but the mere fact that places like Salad Stop (a customizable salad place), Bliss Bowls (thick smoothie bowls made of fruit and vegetables and topped with more fruit or healthy grains), and Wholesome Table even exist and are doing well is a sign that eating better is hitting the mainstream.

Take Root and Baby Good both make snacks that are made of the best all natural ingredients – taking snacking, a realm lorded over by processed chips and the like, to a better place. A lot of restaurants sneakily have one or two vegetarian options—almost unheard of a few years ago. If there was any time to start eating more vegetables, now is the time to do it because on other side of the fence, the restaurants are doing their best to make it delicious and satisfying.

2| Get to know mamang magsasaka and mangingisda .

Or at least recognize and support their efforts. We’ve been a bit behind in the curve with this, but alongside healthy eats, now is a good time to make relationships with the people who grow and catch your food. The organic movement is bigger than ever, and yes it comes with a price as well, but the more we consume of it, the better the prices will get. Although I am told that even the “all natural” farmers—those who can't get an elusive organic certification—is perfectly fine too.

More and more chefs are working with farmers to get exactly what they want, giving mamang magsasaka business, and pride in what he does. Same goes for fisher folk. Learn more about sustainable fishing. A small outfit called Balangay’s Best are working with fishermen to catch seasonal fish—those in big supply, or those out of the mainstream that are also in abundance so as not to deplete our precious resources. This is the wave of the future, perhaps not for this generation, but for today’s children and their children: take steps now for our food security. Nutritious food should be accessible to ALL, not just those who can afford it.

3| A few years ago, it seemed that Manila had a bit more money to spend. Not anymore.

Back then, we welcomed the proliferation of higher-end restaurants, some that breached the previously unheard of P5,000/person mark. But now, in 2017, it’s noticeable that we are not as affluent as we think. Although my basis is only with people I talk to, and observing the many restaurants I have been blessed to be able to go to, I think the sweet spot amount that people with money to spend are willing to part with is actually P500. Lower even for lunch. Once you hit the P700 peso mark it gets dicey. To spend P1,000 makes your pool really small. And sure, some people can spend chump change like P5,000 with impunity, once a week or more even, but how many are there to go around?

4| The battleground in F&B is now in the arena of value-for-money.

People may be swayed to spend a little more if they go home feeling like they got their money’s worth. Buffets pack it in even if they cost more because one can sit there for two hours and roll home. (Of course, this is not exactly the best example!) What does this say? It says to go back to good ol’ grace and hospitality. Go the extra mile to make your guest feel special. Make sure your food is of high quality, even with the humblest of ingredients. Foo'd by Michelin-starred chef Davide Oldani in BGC, for example, sets a great trend. He calls it “Cucina Pop,” making fine dining accessible to everyone without sacrificing quality. Tasting menus start at P800 for an elegant three-course tasting menu, P1,200 for four courses. In the realm of tasting menus, that is almost unheard of. He’s trying to make fine dining more democratic, and that’s always a good thing.

5| The devil is in the details.

Provide a dining experience—even if it’s in a humble café setting, or a casual joint that only serves one dish. Invest in training your Front of House, service is often overlooked around here. But good service, service that shows they genuinely care for guests and their restaurant, translates to return customers. At the end of the day, that’s what you want, especially in today’s atmosphere of restaurant goers acting like bees, flitting from one restaurant to the next, chasing the hot new thing.

6| Find ways to make true connections with you customers.

The restaurants of yesteryear did just that—the Café Ysabels (which, incidentally, is closing this month), the Bistro Lorenzos—you felt comfortable, at home, and you knew exactly what you were getting.

Nowadays, trends overshadow the customer experience. Everyone wants to out-cool the next person. And sure, maybe on Instagram it all looks great, and on paper it makes you, the owner or chef, look like a rock star, but if you don't work on connecting—be it through your food, or the way you treat people, or the culture you build in your space—then you only really get your 15 minutes in the spotlight. Stop treating the food business like fast fashion. Wouldn't you rather that be 15 years? I’d rather quietly have 45 outlets of, say, Fiorgelato, than one ultra hipster 3,000 flavor nitrogen ice cream joint.

Believe me, hype will only get you so far. In this town that lives on hyping things until it blows up, fear the trail of failed restaurants in its wake. (If I had the means and I had my way, my goal now would be to have a restaurant that no one talks about too much. No wave after wave of bloggers, no “influencers”, no one million flat lays, no selfies against my blank wall, no one-gallon milkshakes with a whole cheeseburger on top.. just honest, fresh, delicious, addictive food that will quietly serve a steady stream of happy customers. That’s the dream for me. Nothing wrong with bloggers and social media and all—I am, after all, a part of this machinery, but at some point…it all gets a bit too much, don’t you think? Back to basics, folks.)

7| The big city, Manila, where all the new stuff pops up, now has an obscene number of restaurants.

With more to come. In this battle ground, it’s just becoming so difficult to do food as a business even if you have a great product. What’s one to do? Think out of the box: leave. Manila isn’t the only big city with a populace that wants to eat well. Go to the other cities or towns and plant your flag there. Sure, it’s radical—but I know of people who are doing just that. In a way, they’re like pioneers, finding their place in the sun.

A good case to look at is San Juan, La Union whose El Union Coffee is ground zero for people in Surftown. At some point, everyone pops in at El Union. Kiddo is one of those who gave up his city life and moved here.) Driven initially by the surfer economy, there are now very interesting and progressive businesses popping up there because of the town’s accessibility. People are coming to relax, and take in the eclectic vibe—mainly because of new roads that allow easier passage there. Surely there are more places like this up North and down South.

8| Champion the regions.

In a country that's made up of 7,000 islands, there are tons of culinary treasures to unearth all over the place. Regional cuisine is and should be brought to a wider audience. This is why I’ve always thought that JP Anglo’s Sarsa Kitchen and Bar is such an important restaurant—he’s flying the flags of his beloved Bacolod and its cuisine higher than anyone ever has, churning out the flavors they’re best known for but innovating and moving it forward. There is no doubt that there are other JPs out there, just waiting for a window of opportunity, cooking away in Bicol, or Cavite, or Butuan. Manila and indeed the rest of the world is just waiting for you.

9| Invest in fellow Pinoys.

Folks, there are lost of talented cooks out there who I’m almost sure a lot of you have never heard of, but is one damn talented cook. When people ask me for advice whether or not they should open something, or better yet what’s a good franchise they can look into I always tell them to consider coming up with their own concepts. Make it something fun and more importantly it make it local, built from the ground up.

There's nothing wrong with international franchises—there is room for everyone—but if you can organically grow something, you can make your investment go further than if you had to buy rights and all.

10| Understand who you are selling to.

Too often these days it seems like people had some extra cash and decided to jump into the biz. It’s obviously never that simple. Location is always a crucial consideration. Profiling of customers. Knowing what they’re willing to spend. What kind of food do they want to eat. What kind of space do they want to eat in. So many details, really, and all important in shaping your business. Because the restaurant biz is so challenging nowadays that its best to know as much as you can about what you’re up against, to navigate the waters to success. Nowadays it pays not just to have good food. You have to be creative, savvy, and you have to have copious amounts of grit, determination and graciousness.

This presentation was given by JJ Yulo at the recently concluded World Street Food Congress. Minor edits have been made by the Esquiremag.ph editors. For the full, original version, visit Yulo's Facebook page .

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Opening a Restaurant, SWOT Analysis Example

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Concept and Theme

The concept behind the restaurant is modern French, created and served with an emphasis on casual elegance. This ties in with a key element of the concept, which is affordability. Given opportunities created by technology, along with an increased public familiarity with a variety of cuisines and cultures, the underlying theme of the restaurant is to reinforce classical French cooking in an accessible way to the modern customer. It is essentially a restaurant that will reintroduce French food to markets that have long been exploring more recent presences and cultural influences, and do so in a way more comfortable than French cuisine is usually perceived.

To that end, we are to be known as more of a bistro than restaurant, an identity in place due to both theme and spatial concerns. The Cafe Provence seeks to be small and intimate, and this is to be a major strength. Many restaurants fail because they entertain ambitions beyond the reasonable scope of what they can provide, and food and service quality declines in efforts to bring in more business. The cafe will be a single room, seating no more than 40 guests, and the décor will be based completely on the theme of “elegant familiarity.” Fresh flowers, clean white linen or polished bare tables, and comfortable seating will be its trademarks of style. Everything will be simple, but correct. For example, high quality silverware will be used, as the table settings will contain only the basic utensils. A very limited menu of affordable wines will be available, and the small service staff will be trained to be welcoming and knowledgeable. The entire concept depends on creating and maintaining an atmosphere of warmth and ease, in which classic French country dishes are presented, customers feel “at home,” and the pricing is moderate.

Selecting the location of a new restaurant is absolutely critical, and it relies on a great deal more than choosing an available site that seems commercially active. The location must be chosen with the image or concept of the restaurant in mind (Rainsford, Bangs 35). For example and rather obviously, a beautiful space for the cafe found in a predominantly Latino neighborhood, and one offered at a good rent, would be unacceptable. The same would be true if we were to seize on an opportunity to take advantage of a very inexpensive rent because the area is in decline. Many restaurants take these courses, trusting in that the place itself will overcome the location challenges. The greater reality is that no opening restaurant can afford to not be as ideally situated as possible.

Given the concept, then, the cafe will be in an area of the city where the theater district is set. Even smaller cities have such areas, and there are enormous advantages built into such a location. With the cafe devising a pre-theater menu, we will seek to enter into arrangements with the theaters, offering discounts or packages. Then, the clientele attending plays is the clientele we seek: urbane, professional, but not necessarily out to spend a great deal. The advantages are so strong, in fact, that determining the city itself will be guided by this. Not only will the good food at moderate prices attract those going to the theater, the location offers the benefit of a “second wave” of business after the shows, and we will have a light supper/dessert menu available then. In terms of strategy, this allows the cafe to run with one kitchen person, or none at all if we have the light foods and desserts accessible to the servers. We will also have the opportunity to attract customers not going to the theater, as play times will provide us with the peak dinner hours of eight to ten free. In creating the cafe based on this specific location, we set ourselves up to obtain maximum business from a variety of clienteles, one of which is “built into” that area.

Menu and Kitchen

As with all the elements of the restaurant, planning the menu relies on factors seemingly removed from the actual cuisine. Kitchen equipment, for example, must be selected that works with the kind of cooking to be done, just as hiring the chef and even designing the space should in some way complement the menu (Baraban, Durocher 12). This is all very much in mind as we devise the Cafe Provenc e menu. Most importantly, we will be emphasizing the reality that, contrary to popular thinking, French country cuisine is both highly accessible and not “intimidating.” It is classic in preparation and it requires a skilled chef, but it also reflects today’s demand for fresh, regional products. Equally importantly, as this is a cuisine developed from the farm regions of France, it does not rely on costly ingredients. The beauty of French country food is that the refined tastes come from preparation, rather than expensive items. Consequently, the menu will reflect both the elegance and accessibility of this.

Key elements of the menu, then, will be those basics familiar to many: omelets, crepes, and country casseroles and stews. Such a menu allows for a more efficient kitchen; as, for example, the chef must give his focus to each blue cheese and walnut omelet, a regular dish such as a coq au vin or a rabbit stew may be prepared in advance of opening and simply be heated and dished out. Such items, in fact, gain in flavor through simmering for hours. The same is true for the fruit tartines that will be the dessert mainstays. While the menu must vary to reflect seasonal offerings, the mentioned items indicate a kind of menu strategy. Dishes like grilled fish or omelets are made to order but demand little time; more complex dishes like stews can be prepared in advance; and costs are controlled by using fish, chicken, rabbits, and other proteins usually less expensive. It must be noted here as well that the chef hired will be critical in making all such determinations, as he or she will be fully responsible for maintaining the quality and authenticity of the menu.

The Kitchen

The open kitchen concept is attractive for this type of bistro, and seems appropriate. We want to create a warm, pleasant atmosphere, and the chef visible at his stove would certainly enhance this. Certain weaknesses, however, compel us to create the closed kitchen. On a practical level, an open kitchen typically costs 25 percent more than a standard kind to maintain, and because of space requirements (Walker 60). There are other drawbacks as well. Even as we will maintain the highest standards of cleanliness, even small restaurant kitchens are necessarily messy places, and the cooks are under pressure to “put on a show” we believe will not enhance the food. Open kitchens also often generate too much attention from the customers, potentially creating conflict as the kitchen activity is improperly assessed by them. Finally, it is a mark of respect to the chef that he or she operate in a completely independent space.

In terms of equipment, basics will be observed with an emphasis on a rugged, high-quality gas range. The entire set-up of what must be a limited space will be designed for simplicity. As our output will not be excessive, the main components will be the range and ovens; an oak table for food preparation; a single, large refrigerator; a small refrigerator for servers’ needs; a dishwashing station; and a salad/cold item preparation area. As for the actual food pick-up, there will be heat lamps above the central oak table. The entire space, then, will be arranged around the tables as the centerpiece and the other components along the walls, allowing for a free range of movement. Unless dictated otherwise by the chef, there will be no freezer beyond the small one in the single refrigerator. This is for expediency, as well as to reinforce the ongoing usage of only fresh ingredients. Lastly, the chef will see to it that the kitchen is always prepared for inspections of any kind, including the desire of a customer to step inside for a moment.

Works Cited

Baraban, R. S., & Durocher, J. F. Successful Restaurant Design . Hoboken: John Wiley & Sons, 2010. Print.

Rainsford, P., & Bangs, D. H. Restaurant Start-Up Guide. Chicago: Kaplan Publishing, 2000. Print.

Walker, J. R. The Restaurant Study Guide: From Concept to Operation. Hoboken: John Wiley & Sons, 2007. Print.

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• Culinary Arts

Food entrepreneur: How to Master Restaurant Management?

January 28, 2021 •

22 min reading

If opening a restaurant is an ambitious challenge, this article aims to explain you why and how some have been successful in living from their passion for food:

• What is a Food Entrepreneur?

What Skills Does a Food Entrepreneur / Restaurant Manager Need?

The food industry explained, the different types of food businesses, top trends for food service businesses.

• How to Open a Restaurant?

How to run a successfull food business?

How to find a business mentor, consider joining a restaurant management training, what is a food entrepreneur an independent restaurant manager.

Food entrepreneurship is the new buzzword in the food industry, but what is the real definition of a food entrepreneur? 

By definition, a food or culinary entrepreneur is simply someone who starts their own business in the food or culinary industry. It could be someone who creates the next meal kit for a specialty diet (for example, vegetarian keto meals), someone who purchases a food truck and launches their own small food business, or someone who opens their own catering company. Food entrepreneurs can address a challenge they see in the food system by combining food, business, and social entrepreneurship.

The term is so hard to classify because anyone who is doing something new with food and business falls under the umbrella of food entrepreneur. Any self-employed restaurant manager would be considered a food entrepreneur.

The broad base can make it difficult for aspiring entrepreneurs to get started. People wonder whether their skills will translate - or what skills they need to have to bring their food business to life.

READ: What does a Restaurant Manager do?

Food entrepreneurs either need a solid in both culinary and business skills, or they need a partner that has the skill set they lack.

For instance, if you're a chef, you can launch your own food business but your chances of success increase if you either master business basics or partner with someone who has business savvy.

To bolster your odds of success with food entrepreneurship, learn skills including:

• Financial reporting and budgeting
• Business planning
• Public speaking
• Management and leadership
• Culinary knowledge
• Creative problem-solving
• Team building

In hospitality guest experience has always been one of the most important factors, but consumers now want more. Hotels and restaurants need to provide an outstanding experience that exceeds guest expectations. For this level of experience to happen, managers will need to embrace innovative new programs and technology that help to create memorable experiences for guests.

READ: Hospitality skills: the future is Affective Hospitality

Globally, the food and dining industry is expanding in creative new ways with the advances of technology.

Food business leaders are either leveraging technology within their business model -- as in the continued popularity of quick service restaurants where diners can order from their devices -- or bucking the trend with pop-up or personalized food businesses that center the experience, not the technology.

In the market, preferences are shifting as consumers become more comfortable with the direct-to-consumer shopping model. Within the culinary fields, the applications here go beyond meal delivery or grocery delivery to personalized service in almost anything you can think of, such as fine wines, fresh smoothies, or fermented foods. Wellness was a major food trend in 2018, and it continues to dominate, as consumers seek out superfoods that promise a mind-body benefit.

READ: What is the future of food and where is gastronomy heading?

They want to know where and how something was grown, what ingredients are in an item, and even what the values are of the business that created that item. Culinary entrepreneurs can gain insight from consumer preferences to build a brand from the ground up that gives modern diners what they want.

Within these food industry trends worldwide, there's room to personalize the model (and differentiate your food business) by drawing on different culinary traditions, flavors, ingredients, or techniques.

With all the different types of food operations, it is important to consider what’s out there before you choose what type to open as a business venture.

If you hear that someone has decided to open a food-related business, your immediate thought is likely “restaurant.” However, when you really think about it, a restaurant can mean many things--plus, there are an abundance of options for food-related businesses outside a traditional sit-down eatery.

Whether you’re in the planning stages now, or you just have that entrepreneurial spirit and think that maybe one day you’d like to take your passion for food and turn it into a business of your own, it makes sense to learn about some different types of food businesses.

Bakeries & Dessert Shops

From a traditional “French” bakery to a hip cupcake shop to a location that doesn’t have a public front and instead creates wedding and birthday cakes, few towns are complete without at least one great bakery.

Today, there is a need for many specialty shops that give customers a choice when it comes to ingredients and types of desserts offered. A bakery can be a simple affair with just a few cases for customers to browse goods, or it could also include a place for folks to sit and enjoy a dessert while on an evening stroll. The options are endless.

Pubs, Bars & the Like

The pub and bar scene is constantly changing. While the focus is often on drink, not dining, the gastro-pub is becoming a huge draw in many urban and suburban areas.

If you plan to serve alcohol, you may have a few more rules and regulations to manage than you would with a dining establishment that doesn’t serve. Make sure you are aware of any of these and be prepared for additional licensure costs to get off the ground.

Restaurants

A restaurant isn’t “just a restaurant.” This can include anything from a simple deli to a fine dining establishment serving seven course meals. With a restaurant, location is key and service is everything.

Make sure you research your target client base and check out the competition in depth before you open.

After all, 1/3 of restaurants fail in their first year.

Delivery Services

Delivery is becoming more common as people get busier and busier. Whether you choose to offer delivery of your own product (such as with a delivery pizza restaurant) or team up with other local businesses to get food from one place to another, delivery is a sector of the food industry that only has room to grow.

Food Trucks

A food truck is a small food business that you can take with you anywhere you go.   In the past, they were often parked in urban areas, giving workers an alternative dining option for a busy lunchtime crunch.

However, today the food truck is a staple of fairs and festivals--in fact, there are often “food truck days” held in small downtown areas to bring these businesses together for the benefit of all involved. With a food truck, creativity is king!

If you are looking for a food-related business that lets you make your own hours and choose your own way of doing business, catering could be your calling.

You can choose to do this on a part-time basis or operate a full-scale catering firm. You won’t necessarily need a storefront, just a good commercial kitchen and a transport vehicle.

READ: Sodexo: How Employee Engagement is Transforming the Catering Giant

Coffee Shops

A coffee shop can be a good option for those looking to enter food service without a huge menu. Serve coffee, drinks and a few small snacks to hungry commuters or open up your location and offer free wi-fi to attract those who want a place to study or work on projects away from the office.

A coffee shop is often a community center of sorts. If you want to do things the “right way” make sure you study up on coffee and barista techniques so you can serve a great cup to your guests.

Specialty Food Shop

A food related business doesn’t necessarily mean you have to cook meals or even serve beverages. Specialty food shops are a great way to share your love for food with your community. Just make certain you choose a type of shop that will have enough support in the community around you, to avoid any difficulties down the road.

READ: Commercial vs non-commercial food services: What is the difference?

There are a lot of opportunities for forward-thinking entrepreneurs who want to jump on the food industry train.

If you’re looking to start a food-related business, trying to decide exactly what type of business in which your skills would be best utilized is the first step. Today, there are more things to think about than just figuring out what type of restaurant you’d like to open. There are actually many different opportunities for forward-thinking entrepreneurs who want to jump on the food industry train.

We’ve put together a few trends food entrepreneurs should be aware of when putting together their business plans.

READ: Top 10 Food and Beverage Trends

A Focus on Health

Today, more than ever, people are thinking about their health. For many, this includes eating healthier meals on a daily basis. Restaurants that offer healthy choices for their patrons will be able to attract customers that are making health a top priority. Remember, even if you choose to offer healthy choices at your restaurant, cafe or deli, you can also offer more indulgent options as well. Finding the perfect balance may be difficult but when you do so you’ll be able to attract a wide variety of customers who may bring along friends and family too.

Dining for Those on Restricted Diets

Whether or not they are doing it for health reasons, more and more people are on restricted diets today. These diets may include vegetarian, vegan, paleo, keto, Kosher, gluten-free, dairy free and others. While you may not want to have a menu that is ALL vegan or ALL gluten-free, by offering at least a few options you will avoid alienating certain customers. In addition, you can become a restaurant or establishment that is known for being inclusive and appealing to many diners, no matter what types of food they prefer or require. This immediately makes your business a great place to bring a crowd!

Food delivery is hotter than ever. In the past, delivery may have been limited to pizza or the odd Chinese restaurant that decided to offer the service. However, today more and more restaurants are getting in on the action. This is one trend you will certainly not want to ignore. Even if you do not wish to offer in-house delivery, as this can be challenging, of course, there are other options. Go the extra mile to make your establishment easy to access for services such as GrubHub or UberEats. This can help you gain an extra stream of business, especially during the daytime lunch hour when offices are looking for a way to feed their staff.

READ: Key Trends in the Food Delivery Industry

Other Convenience Options

In addition to delivery, your customers are looking for other ways to make dining convenient. Many restaurants are offering drive thru or curbside pickup for meals to go. This can make for a very easy dinner option for families on the go! When you’re setting up the layout of your restaurant, think about how you can make dining in AND carrying out easier for your customers. By doing this, you may boost your business during the week, which can often be a less-busy time for some businesses, and could mean the difference between success and failure for a new restaurant.

Beyond Borders

More and more people are becoming familiar with a wide variety of ethnic cuisines. The world is a much smaller place that it has ever been before. As such, you’ll find that ethnic restaurant are very trendy. In the past, there were certain types of ethnic food that was appreciated such as French and Chinese, while others wouldn’t receive much attention. That is no longer the case. Today, you’ll find that even less-known cuisines will garner excitement among many guests. If you know a certain type of food, don’t be afraid to go with what you know. You’ll find that following your passion is almost always a good move.

Beverages Matter

Food is usually the highlight of a night out, but drinks are becoming more than just a sideline. When you’re thinking about what type of business to open, don’t forget that coffee shops, bars, pubs, beer gardens, tea rooms, and wine and dine establishments are often a good option too. You don’t have to choose beverages above many of these establishments that are most successful have a menu featuring delicious edibles as well.

While these are some of the trends in the food industry today, the most important thing when trying to decide what type of business to open is that it is up to you to keep it up and running. Even if something is trending, if you don’t feel passionate about it, you’re not going to have your highest level of success. Do some research on these trends, but take the information with a grain of salt and put together a business plan that will hopefully lead to success and happiness.

READ: 7 restaurant technology trends to watch in 2021

How to Open a Restaurant? How to Become a Restaurant Manager?

When you've decided to start a food business, you must spend some time planning and plotting - this will save you time and money in the long run.

If you are looking at opening a food-related business, the concept can seem overwhelming at first. There is so much to think about that it may seem like you will never accomplish your goals and get off the ground. However, for every successful business, there was a motivated individual just like you who had dreams too. While every restaurant, catering company or food truck will get its start in a slightly different way, we’ve put together a guide that will put you on the right path and help you get started.

READ: How to Start Your Food Business: an 8-step Guide

Consider Starting Small

You should consider testing your idea before you go all out with a pop up location. It will give you an opportunity to run through your ideas without all the risk. Many food businesses start as a hobby at home and once they outgrew the space they moved on to something bigger.

Along the same lines, perhaps starting with a food truck rather than a full-scale restaurant may be a smart idea--as that will give you more flexibility so you can make adjustments to your menu and plan later if necessary.

Do Your Research

The food industry in general is highly competitive. Therefore, it is imperative that you do plenty of research before you dive in with both feet. Doing research will help you to define your target market, niche opportunities, and identify your greatest risk factors. Then, you can build a strong business plan and move forward with setting up your restaurant or food business.

Create a Business Plan

It takes more than just great recipes to succeed in the restaurant industry. Good business sense is necessary too. Sit down with someone who knows the industry and your area to write a business plan--both a long term and a short term plan.

You need to have something to work from so that you constantly have goals to work towards. With a solid business plan in place, you will be much more likely to succeed in your ventures.

READ: Restaurant Management: The 7 elements of a Business Plan

Secure Your Financing

Whether you’re planning to start a food truck that’s only open a couple of weekends a month or you want to own the next great restaurant in a fine dining city, you need money behind you.

Instead of trying to start with a wing and a prayer, so to speak, go ahead and secure your financing now before you buy the first piece of produce or create the first recipe. Having your financing steady will make a huge difference your chances for success.

READ: Restaurant Management: Financing your food business

Start Your Business the Right Way

In addition to having a good financial backing, there are other things you need to do to start your business the right way.

• Do you have a good location picked out?
• What about employees--do you have the right people for the job?

Don’t start things rough and then try to backpedal and fix things later. You’ll certainly regret that decision. Do things right the first time and you’ll have a much higher success rate.

READ: Restaurant Management: How to choose the right location?

Know Rules & Regulations (in Your Country, Specifically)

The food industry has many rules and regulations. Each country (and some states, provinces and cities) have rules and regulations when it comes to zoning, food handling and customer service.

Make sure you know these rules backward and forward. By following these perfectly, you can save yourself trouble and potentially save money and time too.

Find a Business Mentor

A mentor is someone who can help you through every step of starting your business and getting it off the ground. It may be someone you meet during your education or someone who is a “friend of a friend” so to speak. The important thing is that this individual knows the business and that they are dedicated to helping you. A good mentor is one of the most valuable tools you can have on your quest towards restaurant success.

The reality is that no matter what type of background you have, a solid education will help you succeed.

As author Richie Norton said “Opportunities will come and go, but if you do nothing about them, so will you.”

What's the best way to succeed with your new food business? It's to start off strong and keep up your good work.

What's the best way to run a successful food business? It's not a trick question. When you break it down, it's simple once you realize that the best businesses are intentional from the ideation phase on. Put simply, when you ace your food business launch, things will go much smoother.

So here are our tips for food entrepreneurs on how to start a great food business from the ground up.

Research and Plan

You may be eager to dive in and start testing recipes, but the wisest food entrepreneurs know it's best to take a step back from dreaming and think logically. Noting the competitive nature of the food industry, the Small Business Administration recommends food entrepreneurs do their research before opening a new venture.

You'll also need a solid understanding of the laws that affect running your business. Whether it's laws governing wages and employees to laws regarding food safety, research into regulations can be time-consuming. However, it's worth the time to figure these things out, so you don't run the risk of accidentally violating a law you didn't even know existed!

Research can help you figure out where your target market is saturated and where there are opportunities, what made other businesses fail and how you can succeed, and what customers in your area want to see in a new food business so you can offer it -- among other valuable things.

Your research can help you establish proof of concept and create a business plan, two things you'll need to do if you want to recruit investors.

You will find business plan templates online to guide your thinking. Typical elements of a business plan include:

• Executive summary
• Mission statement
• Product or service information
• Location and employees needed
• Leadership team
• Market analysis and forecast
• Marketing strategy
• Funding requests
• Financial projections

Writing a business plan can feel scary, but you don't need to do it alone. Look for other business owners who have been through the process before and enjoy mentoring new entrepreneurs.

If you study at EHL, you can leverage the power of the global alumni network to find business owners who understand what you are trying to do and what to help you make the best possible case to investors.

Test Out Your Concept

Before you sign a lease -- committing your capital to your idea -- why not test out your concept? Testing out your food business idea will help you put your ideas into practice, so you can fix wrinkles in your product or service model while stakes are still low.

Depending on your concept, you might try cooking products out of your home kitchen, rent space in a commercial kitchen, rent a food truck, or participate in a local market.

By testing out your idea, you can see what customers respond to. You can gauge your pricing model, too. If your beta test is less profitable than you envisioned, it may be time to tweak your menu or lower your price point, so you can attract more customers. Alternately, your concept may be better suited to a different community, where your target audience lives, works, or shops. The only way to get this valuable information is with a concept test.

Knowing what sells well at the early stage may help you tweak your model or, at the very least, avoid investing capital in menu items that don't go on to sell well to customers - something you would have known if you tested your concept first. The trial run can also streamline your role in the business by showing you how much work you can feasibly complete on your own. When you have a better idea of your capability, you can hire smartly from day one.

Hire the Right People

After you've found funding, tested your concept, rented a space, and invested in everything you need, you're ready to open...almost. For most food concepts, you will need help staffing your business as you can't realistically do everything on your own.

The amount and type of staff you need varies by your concept.

If you're creating a line of cookies, for instance, you may need a cook and delivery driver to launch your line -- and you can scale up as your cookie company grows.

If you're opening a restaurant, roles within your restaurant will include purchasing and receiving, cleaning, purchasing, supervisory, human resources, bar service, food servers, food runners, cook, chefs, dishwashers, host, and accounting. For some services, such as accounting, you can hire service providers. For many roles, you'll need to bring on part-time or full-time employees.

Discover a handful of key elements and techniques that can save you a heap of negative service feedback in the future.

Of course, you can do some of the work yourself. However, appraise your skills ahead of time and only take on roles that align with your strengths. If you are a chef who wants to open their own restaurant, then it may be natural for you to take on the executive chef role in your food business. If you are a competent cook with an innovative idea, it might be a better business decision to hire a chef who has experience running a restaurant than to assume this role yourself.

A skilled accountant is a worthy investment for food business owners, as cash flow is often the key to keeping a business going. Accountants who work for other food businesses make great hires, but your accountant doesn't need to have prior food experience as long as they can make suggestions to help you save money. Your accountant can help you understand your KPIs or key performance indicators, such as labor cost or food cost. When you have an accurate understanding of your KPIs, you can shave expenses, for instance by price shopping among suppliers to get the best price on inventory.

To set your food business up for success, look for people who have the right skills for your business. Regardless of the role, people who have prior experience working in restaurants (or similar businesses) are the best choices, as they will need less training in their roles. With front-of-house employees, an extroverted, friendly attitude works best, since these workers interface with customers all day long. All employees, especially kitchen workers, should have a calm and capable demeanor, work well under pressure, and be able to multitask.

READ: Starting a Food Business? Hire Top-Notch Staff and Overcome Turnover

Connect to Your Target Audience

One of the biggest keys to the success of your food business is understanding your target market and communicating your value proposition to them. What does your demographic want and how can your food meet or exceed their expectations? It's easy to lose sight of the audience and think about your concept and your dreams for your food business, but you must keep your potential customers in focus. If you don't tailor your food business to what they want and need, then the odds are greater that you will miss the mark entirely. You may have made your case in a business plan, found investors, hired employees, and done everything else right, but if your target audience simply isn't interested in your food business idea, then you will struggle from day one on.

Social media offers an easy way to connect to your target audience and grow awareness of your food business, but it isn't the only way to reach potential customers. You can use direct mail or email marketing, take out ads on billboards, television, or radio, participate in community fundraisers, join groups of local business owners, and attend networking events. To decrease overwhelm, ask yourself how attending a particular event or trying a new ad strategy will get you in front of your target audience. If the fit is not there, then it's not a good use of your time and money.

READ: Restaurant Management: Marketing for food entrepreneurs

Evaluate and Tweak Your Food Business

With all the hard work done, you can open your food business and start serving customers. During the early days -- and, quite honestly, throughout your tenure as a food business owner -- it is important that you monitor performance and do everything you can to keep standards high.

Two areas to focus on include quality of food and quality of service. These are paramount to the customer experience, which is key to retaining customers and getting new customers by word of mouth.

Customer expectations are high when it comes to food quality: why would people spend good money on a meal when they could make something just as good at home? Always buy the best quality ingredients you can afford and prepare them fresh. Monitor cooks and address any problems quickly, to keep consistency high.

Customer service also affects customer acquisition and retention. If your employees have a reputation for rudeness, diners won't come back - and they will tell all their friends about the horrible service they received! While off-days happen to everyone, monitor the quality of service provided and be proactive about correcting any slips. It could save your business.

A mentor can help a new food business owner turn a potential flop into a potential success--we've gathered some tips to help you find one.

If you are considering starting a food-related business, chances are you know food. However, restaurants, catering companies and the like need more than great recipes to survive in today’s hyper-competitive marketplace. Getting the right training, the right network and the right mentors could be what separates a hugely successful business from one that struggles to remain open.

A knowledgeable and dedicated mentor can have a huge impact on your startup. A mentor may have connections that open doors and the experiences this individual has can help you, as an entrepreneur, from making the same mistakes they have already made.

However, finding the right mentor for your startup isn’t like choosing a plumber from the phone book. You need to know what makes a mentor qualified, how to approach someone to request mentorship and then how to get the most you can from this relationship.

While you certainly have a lot to think about as you find that perfect mentor, we’ve put together three tips that can help you find the mentor who will help you take your restaurant or other business to the next level.

Know What Makes a Great Mentor

Only you know exactly what you are looking for in a mentor. However, a common way of thinking is that the best mentors are those individuals who ask the tough questions and constantly challenge you to not only meet but to exceed your goals. As they do this, they will naturally share their own experiences (both good and bad) and how they have grown from them.

Understand that best mentors will not tell you exactly what to do. They know they are an advisor and that it is up to you to run your company. A mentor who constantly tells you what to do, and becomes upset if you don’t follow along, will likely do you more harm than good.

Find the Perfect Fit

You may think that a well-known mentor or one that worked with someone you know would be the best possible choice for you. While this may, on occasion, help you find someone that can help, it is usually more productive to take a detailed look at your network and look around you for mentors with whom you already have a relationship. Consider approaching the owner or executive of a restaurant or business in your area--someone you admire. These are the people who would be more likely to invest time in your business.

To break the ice, consider sending a quick email explaining your plans and why you are reaching out to them in particular. Avoid sending a form letter, and instead personalize your communications. If you don’t know the person as well, spend some time following them on social media or reading their public blog so you can personalize your contact letter. Don’t push for a meeting right away--remember that the person you’re connecting with is likely very busy! Instead, build up to the first meeting by creating a back and forth chain of contact. Ask thought-provoking questions and always respond to any questions you may receive in return. Connecting with someone as a mentor is not unlike trying to land a first date or build a romantic relationship--it takes time, patience and a willingness to communicate.

Take Full Advantage of The Opportunity

Once you have built a connection, it's important to nurture the relationship over time. Check in regularly by email, text or social media--whatever your mentor prefers. A great mentor will be excited about your progress and take pride in knowing they are making a difference.

Anytime you check in, ask a question to keep the conversation alive. However, don’t allow your message to become to burdened down with details or ask for too much time.

Top business owners and those who are destined for great things will almost always instinctively realize how important a mentor is to the process. As you get your business off the ground, don’t become overwhelmed with the difficulty of the startup, but understand that with the help of an experienced and knowledgeable mentor, amazing things can happen. With the right network, including a mentor who has “been there, done that” your food-based business will be poised for success.

Even if you do know the culinary side of the business like the back of your hand, restaurant management knowledge may not come naturally to you or Vice Versa.

EHL offers various culinary management programs that provides you with the tools, mindset and resources needed to launch a new business within the growing food industry. EHL’s instructors and network of industry leaders provides the ideal environment to cultivate the next generation of food entrepreneurs. You’ll not only get the knowledge, but you’ll find support, and yes mentorship, to help you build confidence and skills. In fact, these relationships you build will serve you long after the course is complete.

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Restaurant Startup Costs: The Real Cost of Opening and Operating a Restaurant

• by Lightspeed

minute read

With a lot of careful planning. 

Thanks to razor-thin profit margins, high operational expenses and fierce competition, one of the best things you can do to assure that your restaurant will eventually turn a profit is to anticipate your startup costs and projected ongoing expenses before applying for loans and financial assistance.  

In this post, you’ll learn how to project the following costs for your restaurant-to-be: 

• Startup costs
• Fixed expenses
• Variable expenses
• Mixed expenses
• How to raise funds for restaurant startup costs

Once you project each of these expenses, you’ll have a good idea of how much it will cost you to open and operate a restaurant. Let’s dive in! 

Build your restaurant menu in minutes

You don’t need to be a designer (or hire one) to create a beautiful menu. Download our free menu templates to get started.

Restaurant expenses vs. restaurant costs

Before we jump into restaurant startup costs and expenses, it’s important to clarify the difference between the two. 

A restaurant expense is a recurring payment like rent, food costs, payroll, marketing and utilities. A restaurant cost is any one-time expense for things like kitchen equipment, dishes or furniture. 

Restaurant startup costs

While the cost to open a restaurant will fluctuate depending on whether you decide to rent or own your space, renovation costs, which equipment you need and more, the things each restaurant needs to buy before opening their doors largely falls into these categories: 

• Commercial space
• Renovations and decor
• Kitchen supplies and equipment
• Restaurant technology
• Licenses and permits
• Marketing costs prior to opening
• Miscellaneous and unexpected costs

1. Commercial space

There are two ways to secure commercial space for a restaurant: leasing and buying.

When you sign a commercial lease, you’ll need to commit to several years of occupancy at once and pay a refundable deposit—usually three to six months’ worth—to secure your spot. 

So how much should you save for a deposit? Well, that depends on where you set up shop. 

The average rent for a restaurant space in downtown Los Angeles , for example, is $2.95 per square foot. For a 2,000-square-foot space, this rate translates to $5,900 each month. In this scenario, you’d need to have between $17,700 and $35,400 for a deposit. 

If you’re buying a commercial space you should expect to pay a downpayment of between 15% and 35%. A space valued at $1 million, for example, would require a $150,000 to $350,000 down payment.

2. Renovations and decor 

Once you secure a space, it will likely need to undergo some renovations before it’s ready for the public. 

Renovation and decor costs vary greatly depending on your restaurant’s concept, your target market and the condition of the commercial space you inherit. Few spaces are turn-key upon purchase. Even a property that used to house a restaurant and is already set up for kitchen equipment, refrigeration, and running water may require extensive renovations to create an appropriate appearance. Renovations can cost anywhere from $5,000 in paint, window treatments and flooring to $50,000 or more.

Our suggestion? Invest only in the essentials from the get-go: The seating, lighting, bar, kitchen service area first. 

While you may want an espresso machine imported from Italy, is the cost justified? Unless the answer is a resounding yes, consider pushing back non-essential expenses until you’re sure you can take them on without sacrificing liquidity. 

When shopping for property, attempt to find an option that is already built out for food service use. A customized kitchen build-out can cost as much as $250,000 —a significant expense many new restaurant owners aren’t prepared to accommodate.

Set a budget of what you’re comfortable spending on renovations and stick to it. If you’re feeling thrifty, there are plenty of DIY restaurant decor ideas that can help you add personality and charm to your space without breaking the bank. 

3. Kitchen appliances and equipment

Opening a restaurant also requires investing in all of the appliances and equipment you need. In your restaurant, you’ll likely need: 

• Kitchen equipment: Ovens, stoves, fridges and freezers, dishwashers, etc. 
• Cooking equipment: Pots, pans, cutting boards, pasta cookers, strainers, ladles, etc. 
• Workspaces: Counters, prep tables, steam tables, cold food tables, etc.
• Bar equipment: Mixers, cocktail shakers, ice cube machines, etc.
• Service equipment: Serving trays, plates, tablecloths, utensils, glassware, etc.

It’s important to make the distinction between essential and non-essential kitchen appliances and equipment. Which ones do your servers, hosts, bartenders, barbacks, dishwashers, line cooks and chefs need to do their job effectively? 

Invest in the essentials from the get-go, otherwise, your staff will run into challenges during service that may detract from your guest’s dining experience . In general, expect to spend an average of $115,655 for kitchen and bar equipment . 

Furniture and tables can cost $40,000 alone, so be sure to plan accordingly.

4. Restaurant technology

Modern restaurants need technology to operate efficiently. Tech helps restaurants run more efficiently by automating processes and collecting data that can help optimize both front of house and back of house operations.

 You’ll need both software and hardware to run a successful, modern restaurant. We recommend starting with this software:

• Point of sale (POS) system – starting at $89/month
• Kitchen display system (KDS) – starting at $12/month
• Employee scheduling software – starting at $29.99/month
• Reservation tool – prices vary greatly
• Loyalty program software – starting at $39/month

Technically, a point of sale (POS) system is non-negotiable. You need a POS to record your sales and take payments, among other things. 

A POS system can be either integrated or non-integrated. An integrated POS system seamlessly connects all of the tools and systems you use to run your restaurant and the whole system works as one. In this system, your employee scheduling software and your POS talk to each other and your data and reports are aggregated and then generated from a single source of truth. 

In a non-integrated POS system, your third-party apps stack on top of your POS and work independently of it. With this type of system, you’re going to spend a lot of time checking and calculating the numbers between different systems. 

“With Lightspeed, it’s one software doing everything for me. Before, I was using four softwares just to complete one task. Here I can do so many tasks with just one software. It’s amazing.” — Rohit Sharma, General Manager, Bar 404

This is the hardware you need to open a restaurant:

• iPads or tablets for your POS and kitchen display systems – prices vary greatly depending on brand, model and whether it’s new or refurbished
• Payment terminals – prices vary greatly
• Receipt printer – $100+
• Cash drawer – $20+

Many restaurants are also investing in handheld point of sale devices that can streamline orders and payments in the front of house , helping waitstaff serve faster and spend more time on the guest experience. 

Expect to spend at least $1,000 on restaurant hardware and set aside about $400 each month for software licenses.

5. Licenses and permits

In order to legally operate a restaurant, you’ll need to obtain certain licenses and permits. Since licensing requirements can vary from state to state and even city by city, check your local regulations to make sure that you’re covered.

Most municipalities require restaurants to have a food service license. This license is governed by the local health department, which will stop by your restaurant from time to time to ensure that your kitchen is up to code. Food service licenses cost between $100 and $1,000.

If you plan to serve alcoholic beverages at your restaurant, you’ll need a liquor license. These licenses can take up to six months to be approved, so don’t wait until the last minute to apply for one. A liquor license can cost between $12,000 and $400,000 with a beer and wine license costing as little as $3,000.

Any employee who works with food in your restaurant will need a food handler’s permit, which ensures that they know how to safely handle and store food. In the United States, a food handler’s permit costs between $100 and $500 and can be obtained online in most municipalities. In Canada, the cost and process vary by province.

Other permits and licenses that you might need to open your restaurant include a business license, certificate of occupancy, sign permit, building health permit, live entertainment license, music license, resale permit, dumpster placement permit, seller’s permit and valet parking permit.

Administrative charges

To begin commercial operations, you will need to form a business entity, submit fees to your state of residence, pay franchise taxes, and work with an attorney to ensure all legal needs are met.

Most companies choose to incorporate or become a corporation, a legal structure that offers significant protection. This process can cost $100 to $250 in filing fees , depending on the state. Franchise tax fees can cost an additional $800 to $1,000, with government filing fees adding an extra $50 to $100 to your expenses.

For businesses that choose to work with an attorney to make sure all requirements are met, you will also have to pay legal fees. Depending on the work necessary, legal bills can range from $1,000 to $5,000 or more. If any other fees or filing requirements apply, your attorney can help you navigate these as well.

6. Marketing costs prior to opening

Build it and they will come, right? Sadly, it’s not that simple. Your brand new restaurant will need marketing help to draw customers on opening day and beyond. 

Not setting a budget for marketing and PR is an oversight that many new restaurateurs make. You’ll need someone who can create your restaurant’s website, design your logo, manage its social media presence, respond to customer reviews and work with influencers.

Marketing on a budget 

For small businesses without thousands to spend on marketing, social media and digital strategies can be very valuable. They offer a good balance between affordability and reach of potential customers—promoted ads costing no more than a few hundred dollars.

Social media goes hand in hand with a robust digital presence. Make sure your restaurant has a website utilizing a responsive design for mobile compatibility, and ensure all content is high quality and adheres to current SEO practices. If you have experience with writing, you may be able to do this independently, but if you’re not sure you’re up to the task, outsourcing to a freelancer can be very cost-effective, often $500 or less. Target local directories and review sites as well as free advertising avenues to build your reputation as a destination worth visiting.

If you’d like to utilize more traditional options, like radio and TV, your marketing budget will need to be more substantial. The average regional radio campaign costs $20 to $80 per ad spot on the airwaves, while a costly TV ad can require a total of $200 to $1,500 per 30-second spot on a local station.

7. Miscellaneous and unexpected costs

Besides what we’ve already discussed, there are also overlooked or unexpected restaurant startup costs that can carry a significant price tag. While it helps to be aware of what they are so you can plan better, don’t let them discourage you from your goal of becoming a restaurant owner.

Unexpected restaurant startup costs can include things like construction mishaps. Having to move unforeseen electrical or plumbing equipment can both delay your restaurant opening and hurt your wallet. Work in some buffer funds into your budget to make sure these unexpected restaurant costs won’t tank your plans. 

Restaurant fixed expenses

Your restaurant’s fixed costs are easier to work into your budget since they rarely change. 

Here are the fixed costs to budget for:

• Rent and building fees
• License fees
• Insurance coverage
• Ongoing marketing

1. Rent and building fees

While how much you pay per month for your commercial space varies greatly depending on where you’re located and how much square footage you have, the monthly rent and building fees you agree to pay when you sign your commercial lease are unlikely to change (until it comes time to renew). 

Leasing a restaurant is a big commitment and a big chunk of your restaurant startup costs. It’s a good idea to enlist the help of an experienced commercial real estate agent to help you avoid common pitfalls that could sink your business. Make sure they know the neighborhood or neighborhoods you’re considering and can advise you on things like competition, business turnover and foot traffic.

Don’t assume tenant-favorable clauses will be volunteered by the landlord. For example, a right to renewal, which is often agreed to by a landlord, but usually only if the tenant asks for it. 

Some other things to consider:

• How much time and money will you need to spend on renovations or equipment to get the space customer-ready?
• Does the lease include an annual rent increase? Be prepared to negotiate a cap on how much the landlord can increase the rent.
• Who’s responsible for renovations, maintenance, property taxes, insurance and other building costs? Make sure you get this in writing.
• Are you allowed to sublet the lease if you need to get out early?

Be sure to have both an attorney and accountant look over any lease to find any potential red flags and confirm it’s within your budget before you sign on the dotted line.

2. License fees 

While most licenses and permits have an initial cost, you may need to renew some of them annually. When you’re deciding which licenses and permits you need, factor in the initial costs and the fixed renewal fees as well. 

3. Insurance coverage

Insurance is an essential part of a functional business, especially for restaurants that want to be fully protected from liabilities. In an atmosphere that sees so many guests, and puts employees at risk for injuries in a busy kitchen full of dangerous equipment, adequate protection is critical. At the minimum, most restaurants will need:

• General liability insurance, to protect against everyday accidents and incidents.
• Product liability, in case any equipment malfunctions and causes injury.
• Liquor liability, a special policy for restaurants that serve alcohol.
• Workers’ compensation policies, to keep employees protected in case of injury.
• Commercial vehicle insurance for any restaurant that offers delivery.
• Restaurant insurance, a specific form of coverage that takes into account industry-specific risks.
• Loss of income insurance, a specialty policy that can provide a safety net if something like a fire or robbery forces you to close temporarily.

Insurance will vary based on size, function and location, but most restaurant start-ups can expect costs of around $6,000 a year. While low-principal plans with high deductibles may seem appealing, be sure you can afford to pay multiple deductibles simultaneously in case something like a kitchen fire resulting from product malfunction closes your restaurant and injures employees.

4. Ongoing marketing

Along with the marketing costs to get your brand up and running, you may want to put a fixed amount aside each month towards ongoing marketing.

Social media ads, influencer marketing, events, PR outreach, you name it. However you decide to market your business, create a monthly marketing budget and stick to it. 

Also, consider amazing customer service as a part of your marketing. 

Nielson reported that 88% of customers are likely to visit a restaurant that they were recommended by friends and family. If you take care of your customers each and every service, they’re far more likely to keep coming back, write positive reviews online and recommend your restaurant to their entourage.

The best thing you can do to market your restaurant is to focus on customer satisfaction and retention. 

Restaurant variable expenses

Your variable costs are more difficult to project since they fluctuate according to their output. Here are the three main variable restaurant costs to account for: 

• Cost of goods sold
• Utility costs
• Payment processing fees 

1. Cost of goods sold

The cost of goods sold (COGS) refers to the cost of the ingredients and materials used to make a dish. Depending on what kind of food a restaurant serves, COGS can vary greatly. If you’re selling Ahi tuna steak, your COGS will certainly be more expensive than if you’re selling cheeseburgers. 

For a restaurant to be profitable, its gross profits should hover around 70%, meaning that for every $100 a guest spends, $70 is gross profit. 

How much you charge for each restaurant item should take this into account; the higher the COGS, the higher the menu item’s price should be. 

When pricing menu items, also take into account your fixed monthly costs. You need to make enough money each month to cover both variable and fixed costs (like labor and rent) and still have net profit leftover. To do that, you need to have menu pricing and restaurant profit margins down to a science. 

If you need help pricing your menu items to account for your expenses (or figuring out what all your expenses are in the first place), consider hiring a seasoned restaurant consultant with experience in the field. This is one area that directly impacts your bottom line long-term; it’s worthwhile to get it right from the get-go. 

2. Utility costs

Don’t let your utility costs take you by surprise. Before signing your commercial lease, ask if utilities like electricity and water are included in your costs. If not, find out what previous tenants paid and use that as a benchmark. 

As a general rule of thumb, restaurant utilities cost around $3.75 per square foot annually. The bigger your commercial space, the more you will pay on gas and electricity. 

3. Payment processing fees

How much you pay in payment processing fees varies depending on your payment processing provider and their fees. For each transaction, there are typically three processing fees (usually a percentage of the transaction value). Here’s a quick breakdown: 

• Interchange fee: Each credit card brand has a percentage-based interchange fee that’s charged to a merchant every time someone uses their credit card as a payment method.
• Card association fee: Each transaction is subject to a percentage-based fee paid to the card brand network (Visa, Mastercard, American Express, etc.)
• Payment processor fee: There are some payment processors who apply either a flat or percentage-based markup fee for routing money from the cardholder to the card association to the issuing bank and then, finally, to the merchant. 

Some restaurants avoid paying payment processing fees altogether by being cash-only, however, this can drastically reduce how many customers you serve. Roughly 80% of all restaurant transactions in the United States are charged to a card. 

Rather than avoid dealing with payment processing providers altogether, we suggest comparing providers and finding the one with the most favorable rates for your business. 

Do your research. Four out of five restaurant owners report being frustrated with payment processors for unclear pricing structures and hidden fees. It’s important to ask processors what the fees are, and if they can increase over the course of your contract. 

“Before switching to Lightspeed Payments , we were having a really hard time understanding what our monthly fees were with our old [payment processor]. I found Lightspeed Payments very transparent, and they were able to offer us lower rates. I would say it’s been a few hundred dollars in savings each month.” — Molly McCrea, Director of Rooms, Wander the Resort

Restaurant mixed expenses

Mixed expenses have both a fixed and variable component. The biggest mixed cost each restaurant has to deal with is labor.

Labor costs

Depending on whether or not an employee is salaried or working for an hourly wage, the associated labor costs can fluctuate. However, we recommend projecting how many employees you need per service, how much money you need to pay them per week and sticking to that budget. 

What’s important is anticipating how much you spend on labor per month and having several months’ worth of payroll saved up prior to opening. Remember, your restaurant likely won’t be profitable right away, so put money aside beforehand to assure you can pay (and retain) your staff. 

Not sure how much staff to hire from the outset? Your staffing needs will depend on your service style and the size of your dining room. 

A quick-service restaurant (QSR) will need more back of house (BOH) staff than front of house (FOH) staff. At fine dining establishments, where the focus is on attentive, personalized service, you’ll need double the amount of FOH staff as a QSR would.

Defining your salary

While some business owners choose not to draw a salary while getting started, you will eventually have to pay yourself – after all, the goal of opening your own restaurant is to be able to support yourself financially. However, the amount you choose to take can affect the money you’re left with and, subsequently, the amount you have to invest in your business.

Most restaurant owners pay themselves a percent of expected sales, while others just take the bare minimum needed to make ends meet. Few people get rich quick owning restaurants, especially in the early days, but a successful restaurant can provide a stable livelihood. In the first one to four years of operation, owners can expect to make between $36,000 to $72,414 .

How much does it cost to open a bar?

If you’re looking to open a bar or pub, the costs can differ greatly from a typical restaurant.  According to a survey released by Restaurant Owner , the median cost to open a bar or pub is $425,500 with the lowest being $275,500 and the highest being $650,500. 

The survey also found that it takes the average bar six months to become profitable, so if you’re looking to open one, you’ll need roughly six months of runway funding to give yourself a fighting chance. 

Some key takeaways from the survey

• The average cost to open came out to $124 per square foot, or $2,710 per seat.
• Construction costs average $250,000, kitchen and bar equipment average $85,000 and pre-opening and training costs average $20,000.
• The average space for a new bar or tavern was 4,250 square feet with an average of 28 square feet per seat.
• New bars and pubs garnered an average $1,380,000 in annual sales with a net profit of 5.5 percent and a 2.4:1 sales-to-investment ratio.

How to raise funds for restaurant startup costs 

While restaurant startup costs vary from concept to concept and city to city, one thing is clear: it costs a lot of money to open a restaurant. Do you have enough cash to open the restaurant you’ve been dreaming of?

If not, you’re not alone. Most people don’t have several hundred thousand dollars saved to self-fund a new restaurant, so they have to get creative with fundraising, financing and loans . Here are several ways to raise the funds you need to open your restaurant:

Go to friends and family

In any kind of business, most entrepreneurs ask friends and family for funds before seeking formal loans from banks or investors. The upside of approaching friends and family is that you have existing relationships based on trust, so you may not need to pay interest when paying them back. 

The downside is that there’s a reason they say money and family don’t mix. Money matters can cause tension  and conflict when it comes between family and friends. However, there are also a lot of successful entrepreneurs and business owners that have worked with and borrowed money from family and friends without destroying these relationships. 

The key is to set rules and boundaries from the beginning, create a legal agreement and treat them like any other investor. Conflicts arise quickly when you take for granted that your investors owe you special treatment because of your personal relationship. Learn more about the right way to mix family and friends with business . 

Get a small business loan (SBA)

The U.S. Small Business Administration connects aspiring entrepreneurs to lenders who understand the challenges that small business owners face. The SBA “reduces the risk for lenders and makes it easier for them to access capital.”

Bring on a business partner

You may have substantial savings, but they may not be enough to fund a restaurant. Consider teaming up with a business partner who has cash and expertise in an area where you fall short. 

That said, it’s crucial to choose your partner(s) very carefully . The long-term costs of entering into a bad partnership far outweigh the short-term advantages of a quick cash injection. Things to consider when choosing a potential business partner:

• Do you trust them? This is the most important thing. You don’t want to spend the entire relationship looking over your shoulder and second-guessing everything they do and say.
• Do they share your values? This doesn’t mean you both have to agree on everything, but when partners’ values align—eg. family, prosperity, work ethic, etc.—they are more likely to have a successful, harmonious relationship.
• Do they bring different and complementary skills to the table? The most successful partnerships tend to be those where each partner possesses different skills and expertise. For example, if you’re bringing the strength on the creative side, look for someone capable of handling the more administrative side.
• Do they share your vision? As partners, you’ll both be responsible for communicating and selling your vision to others, it’s important to keep your story straight and act in accordance with it.
• Do they compromise? If a potential partner is completely inflexible, always has to be right or generally seems unable to compromise on what they want for the good of the business, it’s probably a sign to walk away from this potential partnership.

As with any business agreement, draw up the terms of your partnership in a contract to protect yourselves legally. 

Seek investors

Investors aren’t just for tech companies. Look for local investment firms that have supported restaurants you admire. Don’t approach investors without a rock-solid business plan and pitch deck. When investors see that you have a strong vision, they’ll know you mean business. 

Open your restaurant up to good-willed members of the public through crowdfunding. Create a page on Kickstarter and offer investors incentives for funding your dream. 

Restaurant crowdfunding can be either reward-based or equity-based.

In reward-based crowdfunding, backers get a reward commensurate with the size of investment. The larger the investment, the better the reward. Common incentives for restaurant crowdfunding  include meals, opening night invitations, cooking classes, wine tastings, etc. This Cat Cafe even offered cat play time sessions as an incentive. 

In equity-based crowdfunding, backers get equity in your restaurant. This type of crowdfunding attracts backers that are interested in your restaurant as a longer term business opportunity. Consider running both reward and equity-based crowdfunding campaigns to get a good mix of startup capital and long term investors. 

Keep in mind that there are literally hundreds of crowdfunding campaigns online at any given time. You’ll need to craft a compelling story to make yours stand out, and work hard to promote it. Clearly communicate your restaurant concept’s unique selling points and how it will add value to your community. What makes your idea different and unique? Why will it be successful? 

Crowdfunding campaigns tend to be all or nothing—most platforms won’t release your funds until you’ve reached your funding goal—so the worst thing you can do is run a lackluster campaign that fades into the background. Take the time to craft a compelling narrative and come up with interesting and original rewards.

Most restaurateurs can’t afford to start a business on their own. Find a fundraising method that works for you.

Restaurant startup costs checklist

Opening a restaurant is an exciting venture, but it’s also an expensive one. Use this restaurant expenses checklist to plan for and create budgets for each of these key investments.

• Commercial space – Budget $________
• Renovations and decor – Budget $________ 
• Kitchen supplies and equipment – Budget $________
• Restaurant technology – Budget $________
• Licenses and permits – Budget $________
• Marketing – Budget $________
• Insurance – Budget $________
• Labor costs – Budget $________
• Rent and building fees – Budget $________
• Food costs – Budget $________
• Utility costs – Budget $________
• Payment processing fees – Budget $________

Need help choosing restaurant technology that’s right for your business? Talk to one of our point of sale experts .

How much does a restaurant startup cost?

The cost to open a restaurant varies widely depending on location, size and concept, but it generally ranges from $175,000 to $750,000. Factors like rent, kitchen equipment, initial inventory and decor significantly impact the total expense. Restaurant startup costs for a food truck or small casual dining spot are usually on the lower end, while fine dining establishments in prime locations will require more investment.

What is the most expensive part of owning a restaurant?

The most expensive part of owning a restaurant is typically the initial setup costs, including leasing or purchasing property, kitchen equipment and renovations. Ongoing labor costs and rent or mortgage payments also represent significant financial commitments.

Are restaurants a good business to start?

Restaurants can be a rewarding business venture, offering opportunities for creativity and community engagement. However, they come with high risks, including tight profit margins and intense competition. Success often depends on location, concept uniqueness and effective management.

Can I open a restaurant with 100k?

Opening a restaurant with $100k is possible, especially if you opt for a small space, limit initial staffing and minimize renovation costs. Creative approaches, like pop-ups or focusing on a niche with lower restaurant startup costs, can also make this budget work.

Is owning a small restaurant profitable?

Owning a small restaurant can be profitable if managed efficiently, with careful control of food costs, labor and overhead and proper pricing. Profitability depends on the restaurant’s concept, location and ability to attract and retain customers.

How profitable are small restaurants?

Profit margins for small restaurants typically range from 3% to 5%, but with effective management and strong customer loyalty, some establishments see margins of 10% or higher. Success requires keen attention to cost control and market demand.

What type of restaurants make the most money?

Fast-casual restaurants that offer quick service and high-quality meals at reasonable prices tend to be among the most profitable. These establishments cater to busy consumers seeking convenience without sacrificing quality.

Who makes the most money in restaurants?

In a restaurant, the highest earnings often go to the owners or investors, particularly if they play active roles in management. Executive chefs and general managers in high-end establishments can also command significant salaries.

What is the average startup cost for a small restaurant?

The average startup cost for a small restaurant ranges from $175,000 to $375,000. This includes expenses for leasing space, renovations, kitchen equipment, initial inventory and marketing for the grand opening.

How much money should a small restaurant make?

A small restaurant’s earnings can vary greatly, but successful establishments might aim for annual revenues of $500,000 to $1 million, with net profits (after expenses) of 5-10%, translating to $25,000 to $100,000. Success hinges on efficient operations, marketing and quality control.

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Lightspeed is a cloud-based commerce platform powering small and medium-sized businesses in over 100 countries around the world. With smart, scalable and dependable point of sale systems, it's an all-in-one solution that helps restaurants and retailers sell across channels, manage operations, engage with consumers, accept payments and grow their business.

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